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Does Schooling Cause Structural Transformation?

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  • Porzio, T.
  • Santangelo, G.

Abstract

We study how the global schooling increase during the 20th century affected structural transformation by changing the supply of agricultural labor. We develop an analytical model of frictional labor reallocation out of agriculture to infer changes in birth-cohort characteristics from observed data on agricultural employment. Bringing the model to microdata from 52 countries, we find that the increase in schooling was accompanied by a large shift of the labor force’s comparative advantage away from agriculture. We bring empirical evidence to suggest this relationship was causal. With fixed prices, the resulting decrease in the supply of agricultural workers can account for almost half of the observed reallocation out of agriculture. However, in general equilibrium, the net effect is ambiguous.

Suggested Citation

  • Porzio, T. & Santangelo, G., 2019. "Does Schooling Cause Structural Transformation?," Cambridge Working Papers in Economics 1925, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1925
    Note: gs578
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1925.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Bick, Alexander & Fuchs-Schündeln, Nicola & Lagakos, David & Tsujiyama, Hitoshi, 2022. "Structural change in labor supply and cross-country differences in hours worked," Journal of Monetary Economics, Elsevier, vol. 130(C), pages 68-85.
    3. Javier Cravino & Andrei Levchenko & Marco Rojas, 2022. "Population Aging and Structural Transformation," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(4), pages 479-498, October.
    4. David Lagakos, 2020. "Urban-Rural Gaps in the Developing World: Does Internal Migration Offer Opportunities?," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 174-192, Summer.
    5. Gillman, Max, 2021. "Steps in industrial development through human capital deepening," Economic Modelling, Elsevier, vol. 99(C).
    6. Rodrigo Adão & Martin Beraja & Nitya Pandalai-Nayar, 2020. "Technological Transitions with Skill Heterogeneity Across Generations," NBER Working Papers 26625, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Development; Education; Human Capital; Skills; Occupational Choice; Labor Force Demographics; Schooling; Skill Biased; Labor Mobility; Cross Country Development; Structural Transformation; Agriculture;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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