Advanced Search
MyIDEAS: Login to save this paper or follow this series

Wage Gaps and Development

Contents:

Author Info

  • Alex Mourmouras
  • Peter Rangazas

Abstract

During the course of development, wages and labor productivity are much higher in the nonfarm sectors of the economy than in agriculture. In this paper, we examine the sources and consequences of wage and productivity gaps in the U.S. from 1800 to 2000. We build a quantitative general equilibrium model that closely matches the two-century long paths of farm and non-farm labor productivity growth, schooling, and fertility in the U.S. The family farm emerges as an important institution that contributes to differences in wages and labor productivity. Income from farm ownership compensates farm workers for the relatively low labor productivity and wages earned in agriculture. Farm ownership, along with the higher cost of raising children off the farm, generated a two-fold gap in labor productivity across the farm and nonfarm sectors in the 19th century US. Consequently, the reallocation of labor from farming to industry raised the average annual growth rate of output per worker by about half a percentage point over the 19th century. The paper also draws some lessons from the quantitative analysis of U.S. economic history for currently developing countries.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=20646
Download Restriction: no

Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/105.

as in new window
Length: 45
Date of creation: 01 May 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/105

Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Email:
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC

Order Information:
Web: http://www.imf.org/external/pubs/pubs/ord_info.htm

Related research

Keywords: Development; Labor productivity; Poverty; Agricultural income; Economic models; farm; wage; farming; worker; wages; family farming; farms; farmer; farmers; farm labor; farm ownership; farm operators; family farm; farm workers; farm technology; compensation; farm productivity; farm land; farming households; farm owners; farm model; nonfarm sectors; farm households; farm production; labor income; wage determination; farmland; farm policies; farm lands; family farms; farmer education; farm efficiency; commercial farming; communal farmers; commercial farmers; farm family; farm buildings; farm operator; commercial farms; wage compensation; retirement income; farm incomes; agricultural wage; farm revenue; communal farms; farm owner; wage rate; non-wage compensation;

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Oded Galor, 2004. "From Stagnation to Growth: Unified Growth Theory," GE, Growth, Math methods, EconWPA 0409003, EconWPA.
  2. Francesco Caselli & Wilbur John Coleman II, 2001. "The U.S. Structural Transformation and Regional Convergence: A Reinterpretation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(3), pages 584-616, June.
  3. Caselli, Francesco, 2004. "Accounting for Cross-Country Income Differences," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4703, C.E.P.R. Discussion Papers.
  4. Jeremy Greenwood & Ananth Seshadri, 2002. "The U.S. Demographic Transition," American Economic Review, American Economic Association, American Economic Association, vol. 92(2), pages 153-159, May.
  5. William Lord & Peter Rangazas, 2006. "Fertility and development: the roles of schooling and family production," Journal of Economic Growth, Springer, Springer, vol. 11(3), pages 229-261, September.
  6. Diego Restuccia & Dennis Tao Yang & Xiaodong Zhu, 2007. "Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Working Papers e07-3, Virginia Polytechnic Institute and State University, Department of Economics.
  7. Robert E. Gallman, 1992. "American Economic Growth before the Civil War: The Testimony of the Capital Stock Estimates," NBER Chapters, National Bureau of Economic Research, Inc, in: American Economic Growth and Standards of Living before the Civil War, pages 79-120 National Bureau of Economic Research, Inc.
  8. Foster, Andrew D & Rosenzweig, Mark R, 1996. "Technical Change and Human-Capital Returns and Investments: Evidence from the Green Revolution," American Economic Review, American Economic Association, American Economic Association, vol. 86(4), pages 931-53, September.
  9. Primack, Martin L., 1969. "Farm Fencing in the Nineteenth Century," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 29(02), pages 287-291, June.
  10. Esther Duflo, 2000. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," NBER Working Papers 7860, National Bureau of Economic Research, Inc.
  11. Rosenzweig, Mark R., 1988. "Labor markets in low-income countries," Handbook of Development Economics, Elsevier, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 15, pages 713-762 Elsevier.
  12. Margo, Robert A., 2000. "Wages and Labor Markets in the United States, 1820-1860," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226505077, 01-2013.
  13. Moshe Hazan & Binyamin Berdugo, 2005. "Child Labor, Fertility and Economic Growth," Development and Comp Systems 0507002, EconWPA.
  14. Moav, Omer, 2001. "Cheap Children and the Persistence of Poverty," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3059, C.E.P.R. Discussion Papers.
  15. Chun-Chung Au & Vernon Henderson, 2002. "How Migration Restrictions Limit Agglomeration and Productivity in China," NBER Working Papers 8707, National Bureau of Economic Research, Inc.
  16. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, American Economic Association, vol. 86(4), pages 909-30, September.
  17. Matthias Doepke, 2004. "Accounting for Fertility Decline During the Transition to Growth," Journal of Economic Growth, Springer, Springer, vol. 9(3), pages 347-383, 09.
  18. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, American Economic Association, vol. 90(4), pages 806-828, September.
  19. Stiglitz, Joseph E., 1988. "Economic organization, information, and development," Handbook of Development Economics, Elsevier, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 5, pages 93-160 Elsevier.
  20. Broadberry, Stephen N. & Irwin, Douglas A., 2006. "Labor productivity in the United States and the United Kingdom during the nineteenth century," Explorations in Economic History, Elsevier, Elsevier, vol. 43(2), pages 257-279, April.
  21. Alex Mourmouras & Peter Rangazas, 2007. "Foreign Aid Policy and Sources of Poverty: A Quantitative Framework," IMF Staff Papers, Palgrave Macmillan, vol. 54(1), pages 59-90, May.
  22. Oded Galor & Omer Moav & Dietrich Vollrath, 2006. "Inequality in Land Ownership, the Emergence of Human Capital Promoting Institutions, and Great Divergence," Working Papers 2006-14, Brown University, Department of Economics.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Alex Mourmouras & Peter Rangazad, 2007. "Reconciling Kuznets and Habbakuk in a Unified Growth Theory," Working Papers, Indiana University-Purdue University Indianapolis, Department of Economics wp200704, Indiana University-Purdue University Indianapolis, Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:07/105. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.