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Why is Measured Productivity so Low in Agriculture?

Author

Listed:
  • Berthold Herrendorf

    (Arizona State University)

  • Todd Schoellman

    (Arizona State University)

Abstract

In poor countries, labor productivity in agriculture is considerably lower than in the rest of the economy. We assess whether this well known fact implies that labor is mis-allocated between the two sectors. We make several observations that suggest otherwise. First, the same fact holds for US states where severe mis-allocation is implausible. Second, the gaps between the marginal value products of agriculture and non-agriculture are considerably smaller when measured through wages than through labor productivities. Third, labor productivity in agriculture is severely mis-measured in the US. (Copyright: Elsevier)

Suggested Citation

  • Berthold Herrendorf & Todd Schoellman, 2015. "Why is Measured Productivity so Low in Agriculture?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 1003-1022, October.
    • Handle: RePEc:red:issued:13-277
    DOI: 10.1016/j.red.2014.10.006
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    More about this item

    Keywords

    Mis-allocation of labor; Productivity gaps; Wage gaps;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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    1. Canadian Macro Study Group

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