A commonly held view is that a small open economy adjusts to a negative external shock by switching both expenditure and resources toward the domestic traded goods sector. We show that, when both labor and imported inputs are used as factors of production, the average labor intensity in the...

I study the independent impacts of windfall income from non-renewable resource exports and productivity growth on the changing share of employment in manufacturing in an open economy. The framework includes non-unitary income and substitution elasticities, so that both windfall income and...