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Structural Change Out Of Agriculture: Labor Push Versus Labor Pull

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  • Francisco Alvarez-Cuadrado

    ()

  • Markus Poschke

    ()

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 to popular modeling choices in the recent literature.

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Bibliographic Info

Paper provided by McGill University, Department of Economics in its series Departmental Working Papers with number 2009-08.

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Length: 30 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:mcl:mclwop:2009-08

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  1. Kiminori Matsuyama, 2009. "Structural Change in an Interdependent World: A Global View of Manufacturing Decline," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 478-486, 04-05.
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  3. 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.
  4. repec:fth:stanho:e-92-3 is not listed on IDEAS
  5. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers 2001-11, Department of Economics, Williams College.
  6. Michael J. Boskin, 1998. "Consumer Prices, the Consumer Price Index, and the Cost of Living," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 3-26, Winter.
  7. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May.
  8. Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Magnac, Thierry & Postel-Vinay, Gilles, 1997. "Wage Competition between Agriculture and Industry in Mid-Nineteenth Century France," Explorations in Economic History, Elsevier, vol. 34(1), pages 1-26, January.
  10. Olmstead, Alan L. & Rhode, Paul W., 2001. "Reshaping The Landscape: The Impact And Diffusion Of The Tractor In American Agriculture, 1910 1960," The Journal of Economic History, Cambridge University Press, vol. 61(03), pages 663-698, September.
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  15. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1.
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Cited by:
  1. 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.
  2. Francisco Alvarez-Cuadrado & Ngo Van Long, 2012. "Capital-Labor Substitution, Structural Change and Growth," Working Papers 01, Development and Policies Research Center (DEPOCEN), Vietnam.
  3. Joshua AIZENMAN & Minsoo LEE & Donghyun PARK, 2012. "The Relationship between Structural Change and Inequality: A Conceptual Overview with Special Reference to Developing Asia," Working Papers DP-2012-13, Economic Research Institute for ASEAN and East Asia (ERIA).
  4. Seyfettin Gursel & Zumrut Imamoglu, 2011. "Why is Agricultural Employment Increasing in Turkey?," Working Papers 004, Bahcesehir University, Betam, revised Apr 2013.
  5. Arias-Vazquez , Francisco Javier & Lee, Jean N. & Newhouse, David, 2012. "The role of sectoral growth patterns in labor market development," Policy Research Working Paper Series 6250, The World Bank.
  6. 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.
  7. 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 152269, International Agricultural Trade Research Consortium.
  8. Üngör, Murat, 2013. "De-agriculturalization as a result of productivity growth in agriculture," Economics Letters, Elsevier, vol. 119(2), pages 141-145.
  9. Huang, Zongye, 2011. "The Decline of the U.S. Manufacturing: An Explanation from Structural Change," MPRA Paper 29919, University Library of Munich, Germany.

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