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We observe the following patterns in the US economy during the period 1965-2015: (i) the rise of the service sector, (ii) the increase in leisure time, and (iii) the increase in recreational services. To display the last pattern, we measure the fraction of the value added of the service sector explained by the consumption of recreational services, and we show that it increases during this period. We explain these three patterns of structural change in a multisector growth model, where leisure time and the consumption of recreational services are complements. We show that this complementarity introduces a mechanism of structural change that contributes to explain the rise of the service sector and that also affects the labor supply. We measure the reduction in employment due to a tax increase to illustrate the effect on the labor supply of this mechanism. JEL Codes: O41, O47.

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Empirical evidence suggests that the differences in rates of technical progress across sectors are time-variant, implying that the bias in technological change is not constant. In this paper, we analyze the implications of this non-constant sectoral biased technical change for structural change and we assess whether this is an important factor behind structural transformations. To this end, we develop a multi-sectoral growth model where TFP growth rates across sectors are non-constant. We calibrate our model to match the development of the U.S. economy during the twentieth century. Our findings show that, by assuming non-constant biased technical change, a purely technological approach is able to replicate the sectoral transformations in the U.S. economy not only after but also prior to World War II.