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Agricultural composition and labor productivity

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  • Blanco, Cesar
  • Raurich, Xavier

Abstract

Labor productivity differences between developing and developed countries are much larger in agriculture than in non-agriculture. We show that differences in agricultural composition across countries explain a substantial part of these labor productivity differences. To this end, we group agricultural products into two sectors: capital-intensive and labor-intensive agriculture. As the economy develops and capital accumulates, the price of labor-intensive agricultural goods relative to capital-intensive agricultural goods increases. This price change drives a process of structural change that moves land and farmers to the capital-intensive sector, increasing labor productivity in agriculture. We illustrate this mechanism using a multisector growth model that generates transitional dynamics consistent with patterns of structural change observed in Brazil and also differences in agricultural composition and labor productivity consistent with cross-country data.

Suggested Citation

  • Blanco, Cesar & Raurich, Xavier, 2022. "Agricultural composition and labor productivity," Journal of Development Economics, Elsevier, vol. 158(C).
    • Handle: RePEc:eee:deveco:v:158:y:2022:i:c:s0304387822000876
    DOI: 10.1016/j.jdeveco.2022.102934
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    More about this item

    Keywords

    Structural change; Agricultural composition; Labor productivity; Capital intensity; Cross-country;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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