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Structural Change out of Agriculture: Labor Push versus Labor Pull

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  • Alvarez-Cuadrado, Francisco

    ()
    (McGill University)

  • Poschke, Markus

    ()
    (McGill University)

Abstract

The process of economic development is characterized by substantial rural-urban migrations and a decreasing share of agriculture in output and employment. The literature highlights two main engines behind this process of structural change: (i) improvements in agricultural technology combined with the effect of Engel's law of demand push resources out of the agricultural sector (the "labor push" hypothesis), and (ii) improvements in industrial technology attract labor into this sector (the "labor pull" hypothesis). We present a simple model that features both channels and use it to explore their relative importance. We evaluate the U.S. time series since 1800 and a sample of 13 industrialized countries starting in the 19th century. Our results suggest that, on average, the "labor pull" channel dominates. This contrasts with popular modeling choices in the recent literature.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4247.

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Length: 32 pages
Date of creation: Jun 2009
Date of revision:
Publication status: published in: American Economic Journal: Macroeconomics, 2011, 3 (3), 127-158
Handle: RePEc:iza:izadps:dp4247

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Keywords: structural change; growth;

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References

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  1. 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.
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Citations

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Cited by:
  1. Markus Eberhardt & Dietrich Vollrath, 2014. "Agricultural Technology and Structural Change," CSAE Working Paper Series 2014-21, Centre for the Study of African Economies, University of Oxford.
  2. Margolis, David N., 2014. "By Choice and by Necessity: Entrepreneurship and Self-Employment in the Developing World," IZA Discussion Papers 8273, Institute for the Study of Labor (IZA).
  3. Francisco Alvarez-Cuadrado & Markus Poschke, 2011. "Structural Change Out of Agriculture: Labor Push versus Labor Pull," American Economic Journal: Macroeconomics, American Economic Association, American Economic Association, vol. 3(3), pages 127-58, July.
  4. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Akos, 2013. "Growth and Structural Transformation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9370, C.E.P.R. Discussion Papers.
  5. Francisco Alvarez-Cuadrado & Ngo Van Long, 2011. "Capital-Labor Substitution, Structural Change and Growth," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 12-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  6. Dijk, Michiel van, 2013. "Productivity growth at the sectoral level: measurement and projections," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain, International Agricultural Trade Research Consortium 152269, International Agricultural Trade Research Consortium.
  7. Üngör, Murat, 2013. "De-agriculturalization as a result of productivity growth in agriculture," Economics Letters, Elsevier, Elsevier, vol. 119(2), pages 141-145.
  8. Tounsi, Said & Ezzahid, El Hadj & El Alaoui, Aicha & Nihou, Abdelaziz, 2012. "Key sectors in the Moroccan economy: An application of input-output analysis," Economics Discussion Papers 2012-59, Kiel Institute for the World Economy.
  9. Aizenman, Joshua & Lee, Minsoo & Park, Donghyun, 2012. "The Relationship between Structural Change and Inequality: A Conceptual Overview with Special Reference to Developing Asia," ADBI Working Papers, Asian Development Bank Institute 396, Asian Development Bank Institute.
  10. Arias-Vazquez, Francisco Javier & Lee, Jean Nahrae & Newhouse, David, 2012. "The Role of Sectoral Growth Patterns in Labor Market Development," IZA Discussion Papers 6926, Institute for the Study of Labor (IZA).
  11. Tounsi, Said & Ezzahid, El hadj & Alaoui, Aicha El & Nihou, Abdelaziz, 2013. "Key sectors in the Moroccan economy: An application of input-output analysis," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 7(18), pages 1-19.
  12. Seyfettin Gursel & Zumrut Imamoglu, 2011. "Why is Agricultural Employment Increasing in Turkey?," Working Papers, Bahcesehir University, Betam 004, Bahcesehir University, Betam, revised Apr 2013.
  13. Huang, Zongye, 2011. "The Decline of the U.S. Manufacturing: An Explanation from Structural Change," MPRA Paper 29919, University Library of Munich, Germany.
  14. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.

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