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Agriculture and aggregate productivity: A quantitative cross-country analysis

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Author Info
Restuccia, Diego
Yang, Dennis Tao
Zhu, Xiaodong

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Abstract

A decomposition of aggregate labor productivity based on internationally comparable data reveals that a high share of employment and low labor productivity in agriculture are mainly responsible for low aggregate productivity in poor countries. Using a two-sector general-equilibrium model, we show that differences in economy-wide productivity, barriers to modern intermediate inputs in agriculture, and barriers in the labor market generate large cross-country differences in the share of employment and labor productivity in agriculture. The model implies a factor difference of 10.8 in aggregate labor productivity between the richest and the poorest 5% of the countries in the world, leaving the unexplained factor at 3.2. Overall, this two-sector framework performs much better than a single-sector growth model in explaining observed differences in international productivity.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 55 (2008)
Issue (Month): 2 (March)
Pages: 234-250
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Handle: RePEc:eee:moneco:v:55:y:2008:i:2:p:234-250

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Margarida Duarte & Diego Restuccia, 2007. "The Role of the Structural Transformation in Aggregate Productivity," Working Papers tecipa-300, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  2. Berthold Herrendorf & Akos Valentinyi, 2005. "Which Sectors Make the Poor Countries so Unproductive?," IEHAS Discussion Papers 0519, Institute of Economics, Hungarian Academy of Sciences. [Downloadable!]
  3. Francesco Caselli, 2005. "Accounting for Cross-Country Income Differences," CEP Discussion Papers dp0667, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  4. Charles I. Jones, 2008. "Intermediate Goods, Weak Links, and Superstars: A Theory of Economic Development," NBER Working Papers 13834, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Areendam Chanda & Carl-Johan Dalgaard, 2005. "Dual Economies and International Total Factory Productivity Differences," Macroeconomics 0507003, EconWPA. [Downloadable!]
    Other versions:
  6. María D. Guilló & Fidel Perez-Sebastian, . "Paths of Development in Open Economies: The Role of Land," Working Papers on International Economics and Finance 05-04, FEDEA. [Downloadable!]
    Other versions:
  7. Margarida Duarte & Diego Restuccia, 2006. "The Structural Transformation and Aggregate Productivity in Portugal," Working Papers tecipa-261, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  8. Andres Erosa & Ana Hidalgo, 2007. "On Finance as a Theory of TFP, Cross-Industry Productivity Differences, and Economic Rents," Working Papers tecipa-285, University of Toronto, Department of Economics. [Downloadable!]
  9. Margarida Duarte & Diego Restuccia, 2006. "The productivity of nations," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 195-223. [Downloadable!]
  10. Peter Rangazas & Alex Mourmouras, 2007. "Wage Gaps and Development: Lessons from U.S. History," IMF Working Papers 07/105, International Monetary Fund. [Downloadable!]
  11. Andres Erosa & Ana Hidalgo, 2005. "On Capital Market Imperfections as a Source of Low TFP and Economic Rents," Working Papers tecipa-200, University of Toronto, Department of Economics. [Downloadable!]
  12. Aoki, Shuhei, 2008. "Was the Barrier to Labor Mobility an Important Factor for the Prewar Japanese Stagnation?," MPRA Paper 8178, University Library of Munich, Germany. [Downloadable!]
  13. María Dolores Guilló & Fidel Pérez Sebastián, 2006. "The Quest for Productivity Growth in Agriculture and Manufacturing," DEGIT Conference Papers c011_005, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  14. Aoki, Shuhei, 2008. "Inverse Ramsey Problem of the Resource Misallocation Effect on Aggregate Productivity," MPRA Paper 7930, University Library of Munich, Germany. [Downloadable!]
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  17. Peter Rangazas, 2005. "Human Capital and Growth: An Alternative Accounting," Topics in Macroeconomics, Berkeley Electronic Press, vol. 5(1), pages 1307-1307. [Downloadable!] (restricted)
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