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Agricultural productivity, structural change, and economic growth in post-reform China

  • Cao, Kang Hua
  • Birchenall, Javier A.

We examine the role of agricultural productivity as a determinant of China's post-reform economic growth and sectoral reallocation. Using microeconomic farm-level data, and treating labor as a highly differentiated input, we find that the labor input in agriculture decreased by 5% annually and agricultural TFP grew by 6.5%. Using a calibrated two-sector general equilibrium model, we find that agricultural TFP growth: (i) accounts for the majority of output and employment reallocation toward non-agriculture; (ii) contributes (at least) as much to aggregate and sectoral economic growth as non-agricultural TFP growth; and (iii) influences economic growth primarily by reallocating workers to the non-agricultural sector, where rapid physical and human capital accumulation are currently taking place.

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Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 104 (2013)
Issue (Month): C ()
Pages: 165-180

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Handle: RePEc:eee:deveco:v:104:y:2013:i:c:p:165-180
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