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This paper analyses the determinants of structural change and aggregate productivity growth on the basis of the aggregation of the behaviours of heterogeneous firms in different economic sectors. At the same time this model accounts for the evolution of market structures by providing a consistent generalisation of standard replicator dynamic models, which focus only on a single industry. This paper shows that understanding structural change has to be grounded on a macroeconomic consistent aggregation mechanism reflecting the underlying theory of sorting and selection. It also shows that the combined effect on sectoral output growth of selection on firms’ unit costs and sorting by income elasticities of sectoral demand depends upon the specific institutional characteristics of the market, upon the specific position that a sector occupies in the whole economy, in terms of product characteristics and substitutability …