This paper presents a multi-sector growth model where structural change and balanced aggregate growth coexist. The model shows that when total factor productivity (TFP) growth rates differ across sectors, labor reallocation occurs, with labor moving to sectors with lower TFP growth rates. The employment shares of intermediate and capital goods remain constant during this reallocation. The model uses a constant elasticity of substitution (CES) utility function and shows that a low elasticity of substitution across final goods leads to shifts in employment shares toward sectors with low TFP growth. In the limit, the employment share used to produce consumption goods vanishes except in the sector with the smallest TFP growth rate, while the employment shares for capital and intermediate goods converge to non-trivial stationary values. The model also shows that if the utility function has unit inter-temporal elasticity of substitution, the aggregate capital-output ratio remains constant, and the economy is on a balanced growth path. The results contrast with previous studies that assume non-homothetic preferences or endogenous growth. The model is consistent with empirical evidence on structural change and supports Baumol's "cost disease" hypothesis. The paper also extends the model to include intermediate goods and multiple capital goods, showing that the results hold even with these additions. The key findings are that structural change and balanced aggregate growth can coexist under certain conditions, and that the model is consistent with observed economic data.This paper presents a multi-sector growth model where structural change and balanced aggregate growth coexist. The model shows that when total factor productivity (TFP) growth rates differ across sectors, labor reallocation occurs, with labor moving to sectors with lower TFP growth rates. The employment shares of intermediate and capital goods remain constant during this reallocation. The model uses a constant elasticity of substitution (CES) utility function and shows that a low elasticity of substitution across final goods leads to shifts in employment shares toward sectors with low TFP growth. In the limit, the employment share used to produce consumption goods vanishes except in the sector with the smallest TFP growth rate, while the employment shares for capital and intermediate goods converge to non-trivial stationary values. The model also shows that if the utility function has unit inter-temporal elasticity of substitution, the aggregate capital-output ratio remains constant, and the economy is on a balanced growth path. The results contrast with previous studies that assume non-homothetic preferences or endogenous growth. The model is consistent with empirical evidence on structural change and supports Baumol's "cost disease" hypothesis. The paper also extends the model to include intermediate goods and multiple capital goods, showing that the results hold even with these additions. The key findings are that structural change and balanced aggregate growth can coexist under certain conditions, and that the model is consistent with observed economic data.