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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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    References listed on IDEAS

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    1. Tasso Adamopoulos & Diego Restuccia, 2014. "The Size Distribution of Farms and International Productivity Differences," American Economic Review, American Economic Association, vol. 104(6), pages 1667-1697, June.
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    5. Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
    6. Cristina Echevarria, 1998. "A Three-Factor Agricultural Production Function: The Case of Canada," International Economic Journal, Taylor & Francis Journals, vol. 12(3), pages 63-75.
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    8. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
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    10. Diego Restuccia & Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 707-720, October.
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    13. Berthold Herrendorf & Todd Schoellman, 2017. "Wages, Human Capital, and Structural Transformation," CESifo Working Paper Series 6426, CESifo Group Munich.
    14. Barbara J. Craig & Philip G. Pardey & Johannes Roseboom, 1997. "International Productivity Patterns: Accounting for Input Quality, Infrastructure, and Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1064-1076.
    15. Vollrath, Dietrich, 2009. "How important are dual economy effects for aggregate productivity?," Journal of Development Economics, Elsevier, vol. 88(2), pages 325-334, March.
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    Cited by:

    1. Tasso Adamopoulos & Diego Restuccia, 2014. "The Size Distribution of Farms and International Productivity Differences," American Economic Review, American Economic Association, vol. 104(6), pages 1667-1697, June.
    2. Cai, Wenbiao, 2015. "Structural change accounting with labor market distortions," Journal of Economic Dynamics and Control, Elsevier, vol. 57(C), pages 54-64.
    3. Radoslaw Stefanski, 2014. "Dirty Little Secrets: Inferring Fossil-Fuel Subsidies from Patterns in Emission Intensities," OxCarre Working Papers 134, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    4. Diego Restuccia & Tasso Adamopoulos, 2012. "Land Reform and Productivity: A Quantitative Analysis with Micro Data," 2012 Meeting Papers 1083, Society for Economic Dynamics.
    5. Lagakos, David & Moll, Benjamin & Porzio, Tommaso & Qian, Nancy, 2012. "Experience Matters: Human Capital and Development Accounting," CEPR Discussion Papers 9253, C.E.P.R. Discussion Papers.
    6. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941 Elsevier.
    7. Berthold Herrendorf & Christopher Herrington & Ákos Valentinyi, 2015. "Sectoral Technology and Structural Transformation," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(4), pages 104-133, October.
    8. Jonathan Temple & Huikang Ying, 2014. "Life During Structural Transformation," Bristol Economics Discussion Papers 14/650, Department of Economics, University of Bristol, UK, revised 08 Dec 2014.
    9. Douglas Gollin & David Lagakos & Michael E. Waugh, 2014. "The Agricultural Productivity Gap," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 939-993.
    10. Douglas Gollin & David Lagakos & Michael E. Waugh, 2014. "Agricultural Productivity Differences across Countries," American Economic Review, American Economic Association, vol. 104(5), pages 165-170, May.
    11. Jan Trenczek, 2016. "Promoting Growth-Enhancing Structural Change: Evidence from a Panel of African, Asian, and Latin American Countries," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 207, Courant Research Centre PEG.
    12. Vollrath, Dietrich, 2014. "The efficiency of human capital allocations in developing countries," Journal of Development Economics, Elsevier, vol. 108(C), pages 106-118.
    13. Todd Schoellman & Berthold Herrendorf, 2014. "Wages, Human Capital, and the Allocation of Labor across Sectors," 2014 Meeting Papers 364, Society for Economic Dynamics.
    14. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941 Elsevier.
    15. Wenbiao Cai & Manish Pandey, 2015. "The Agricultural Productivity Gap In Europe," Economic Inquiry, Western Economic Association International, vol. 53(4), pages 1807-1817, October.
    16. Chaoran Chen, 2017. "Technology Adoption, Capital Deepening, and International Productivity Differences," Working Papers tecipa-584, University of Toronto, Department of Economics.
    17. Berthold Herrendorf & Todd Schoellman, 2017. "Wages, Human Capital, and Structural Transformation," CESifo Working Paper Series 6426, CESifo Group Munich.
    18. Diego Restuccia, 2011. "Recent developments in economic growth," Economic Quarterly, Federal Reserve Bank of Richmond, issue 3Q, pages 329-357.
    19. Ball, V. Eldon & Nehring, Richard & Mesonada, Carlos San Juan & Sheng, Yu, 2016. "Comparisons of Real Values of Capital Input," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235914, Agricultural and Applied Economics Association.
    20. Wenbiao Cai, 2016. "Risk, Selection and Productivity Differences," Departmental Working Papers 2016-02, The University of Winnipeg, Department of Economics.
    21. Jones, John Bailey & Pratap, Sangeeta, 2017. "An Estimated Structural Model of Entrepreneurial Behavior," Working Paper 17-7, Federal Reserve Bank of Richmond.
    22. 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.
    23. V. Eldon Ball & Sean Cahill & Carlos San Juan Mesonada & Richard Nehring & Yu Sheng, 2016. "Comparisons of Capital Input in OECD Agriculture, 1973-2011," Review of Economics & Finance, Better Advances Press, Canada, vol. 6, pages 25-48, August.
    24. Fabio Monteforte, 2015. "Structural Transformation, the Push-Pull Hypothesis and the Labour Market," Bristol Economics Discussion Papers 15/654, Department of Economics, University of Bristol, UK, revised 01 Dec 2017.

    More about this item

    Keywords

    Mis-allocation of labor; Productivity gaps; Wage gaps;

    JEL classification:

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

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