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The Agricultural Productivity Gap In Europe

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  • Wenbiao Cai
  • Manish Pandey

Abstract

type="main" xml:id="ecin12214-abs-0001"> For 15 European countries over the 1970–2004 period we find large and persistent agricultural productivity gaps, the ratio of value added per hour in nonagriculture to that in agriculture. Comparing the gap in value added per hour to the wage gap between the two sectors suggests that value added in the data is mismeasured. We further find that, controlling for differences in gross domestic product per capita and institutions, the mismeasurement is positively related to self-employed share of hours in agriculture. Correcting for underreporting of self-employment income using our preferred correction factor reduces the measured agricultural productivity gap by 38%. These findings suggest that underreporting can account for a significant portion of the measured agricultural productivity gap. ( JEL E01, O47, O52, Q10)

Suggested Citation

  • Wenbiao Cai & Manish Pandey, 2015. "The Agricultural Productivity Gap In Europe," Economic Inquiry, Western Economic Association International, vol. 53(4), pages 1807-1817, October.
    • Handle: RePEc:bla:ecinqu:v:53:y:2015:i:4:p:1807-1817
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    1. Cai, Wenbiao, 2015. "Structural change accounting with labor market distortions," Journal of Economic Dynamics and Control, Elsevier, vol. 57(C), pages 54-64.
    2. Trenczek, Jan & Wacker, Konstantin M., 2023. "Human Capital Misallocation and Output per Worker Differences: Beyond Cobb-Douglas," GLO Discussion Paper Series 1331, Global Labor Organization (GLO).
    3. Czyżewski, Bazyli & Poczta-Wajda, Agnieszka, 2017. "Wpływ polityki i rynku na relatywną deprywację dochodową czynnika pracy w rolnictwie," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 3(176).
    4. Wenbiao Cai, 2016. "Risk, Selection and Productivity Differences," Departmental Working Papers 2016-02, The University of Winnipeg, Department of Economics.
    5. Kai Ding & Filippo Rebessi, 2020. "Optimal Agricultural Policy: Small Gains?," Economic Inquiry, Western Economic Association International, vol. 58(4), pages 1907-1928, October.
    6. Marta Guth & Katarzyna Smędzik-Ambroży & Bazyli Czyżewski & Sebastian Stępień, 2020. "The Economic Sustainability of Farms under Common Agricultural Policy in the European Union Countries," Agriculture, MDPI, vol. 10(2), pages 1-20, January.
    7. Nowak, Anna & Kijek, Tomasz, 2016. "The effect of human capital on labour productivity of farms in Poland," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 118(1), pages 1-6, April.
    8. Czyżewski, Bazyli & Poczta-Wajda, Agnieszka, 2016. "Effects of Policy and Market on Relative Income Deprivation of Agricultural Labour," 160th Seminar, December 1-2, 2016, Warsaw, Poland 249759, European Association of Agricultural Economists.

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    More about this item

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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