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The Agricultural Wage Gap: Evidence from Brazilian Micro-data

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  • Jorge Alvarez

    (IMF)

Abstract

A key feature of developing economies is that wages in the agricultural sector are significantly below those of other sectors. Using a panel data set on the universe of formal workers in Brazil, I use information on workers that switch sectors to decompose the drivers of this inter-sector gap. I find that most of the gap between sectors is explained by unobservable differences in the skill composition of workers, as opposed to differential pay of workers with similar skills. The evidence speaks against the existence of large short-term wage gains from the reallocation of workers out of agriculture and favors recently proposed Roy models of inter-sector sorting as drivers of lower average wages in agriculture. A calibrated model of worker sorting can account for the wage gap observed in 1996 Brazil and a share of both the wage gap decline and the diminishing worker participation in agriculture observed during the period between 1996 and 2013.

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  • Jorge Alvarez, 2017. "The Agricultural Wage Gap: Evidence from Brazilian Micro-data," 2017 Meeting Papers 825, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:825
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    References listed on IDEAS

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    Cited by:

    1. Jorge Alvarez & Felipe Benguria & Niklas Engbom & Christian Moser, 2018. "Firms and the Decline in Earnings Inequality in Brazil," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 149-189, January.
    2. David Jaume, 2018. "The Labor Market Effects of an Educational Expansion. A Theoretical Model with Applications to Brazil," CEDLAS, Working Papers 0220, CEDLAS, Universidad Nacional de La Plata.
    3. Jaume, David, 2021. "The labor market effects of an educational expansion," Journal of Development Economics, Elsevier, vol. 149(C).
    4. David Jose Jaume, 2017. "The Labor Market Effects of an Educational Expansion. A Theoretical Model with Applications to Brazil," 2017 Papers pja468, Job Market Papers.
    5. Porzio, Tommaso & Santangelo, Gabriella, 2017. "Human Capital and Structural Change," University of California at San Diego, Economics Working Paper Series qt1ws4x2fg, Department of Economics, UC San Diego.
    6. Porzio, T. & Santangelo, G., 2019. "Does Schooling Cause Structural Transformation?," Cambridge Working Papers in Economics 1925, Faculty of Economics, University of Cambridge.
    7. Porzio, Tommaso & Santangelo, Gabriella, 2017. "Structural Change and the Supply of Agricultural Workers," CEPR Discussion Papers 12495, C.E.P.R. Discussion Papers.
    8. Berthold Herrendorf & Todd Schoellman, 2018. "Wages, Human Capital, and Barriers to Structural Transformation," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(2), pages 1-23, April.

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