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Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata

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  • Hamory Hicks, Joan
  • Kleemans, Marieke
  • Li, Nicholas
  • Miguel, Edward

Abstract

Recent research has pointed to large gaps in labor productivity between the agricultural and nonagricultural sectors in low-income countries, as well as between workers in rural and urban areas. Most estimates are based on national accounts or repeated cross-sections of micro-survey data, and as a result typically struggle to account for individual selection between sectors. This paper uses long-run individual-level panel data from two low-income countries (Indonesia and Kenya). Accounting for individual fixed effects leads to much smaller estimated productivity gains from moving into the nonagricultural sector (or urban areas), reducing estimated gaps by over 80%. Per capita consumption gaps are also small once individual fixed effects are included. Estimated productivity gaps do not emerge up to five years after a move between sectors. We evaluate whether these findings imply a re-assessment of the conventional wisdom regarding sectoral gaps, discuss how to reconcile them with existing cross-sectional estimates, and consider implications for the desirability of sectoral reallocation of labor.
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Suggested Citation

  • Hamory Hicks, Joan & Kleemans, Marieke & Li, Nicholas & Miguel, Edward, 2017. "Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258015, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea17:258015
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    1. repec:oup:qjecon:v:133:y:2018:i:2:p:665-700. is not listed on IDEAS
    2. repec:eee:deveco:v:138:y:2019:i:c:p:135-152 is not listed on IDEAS
    3. 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.
    4. David Lagakos & Ahmed Mushfiq Mobarak & Michael E. Waugh, 2018. "The Welfare Effects of Encouraging Rural-Urban Migration," NBER Working Papers 24193, National Bureau of Economic Research, Inc.
    5. Berthold Herrendorf & Todd Schoellman, 2017. "Wages, Human Capital, and Structural Transformation," CESifo Working Paper Series 6426, CESifo Group Munich.
    6. Porzio, T. & Santangelo, G., 2019. "Does Schooling Cause Structural Transformation?," Cambridge Working Papers in Economics 1925, Faculty of Economics, University of Cambridge.
    7. Gottlieb, Charles & Grobovšek, Jan, 2019. "Communal land and agricultural productivity," Journal of Development Economics, Elsevier, vol. 138(C), pages 135-152.
    8. Douglas Gollin & Martina Kirchberger & David Lagakos, 2017. "In Search of a Spatial Equilibrium in the Developing World," NBER Working Papers 23916, National Bureau of Economic Research, Inc.
    9. Porzio, Tommaso & Santangelo, Gabriella, 2017. "Structural Change and the Supply of Agricultural Workers," CEPR Discussion Papers 12495, C.E.P.R. Discussion Papers.
    10. Lutz Hendricks & Todd Schoellman, 2018. "Human Capital and Development Accounting: New Evidence from Wage Gains at Migration," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 665-700.
    11. Imbert, Clément & Papp, John, 2018. "Costs and Benefits of Seasonal Migration : Evidence from India," The Warwick Economics Research Paper Series (TWERPS) 1161, University of Warwick, Department of Economics.
    12. repec:eee:deveco:v:139:y:2019:i:c:p:78-96 is not listed on IDEAS
    13. Lara Cockx, 2019. "Moving Towards a Better Future? Migration and Children's Health and Education," LICOS Discussion Papers 41119, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    14. Jorge Alvarez, 2017. "The Agricultural Wage Gap: Evidence from Brazilian Micro-data," 2017 Meeting Papers 825, Society for Economic Dynamics.
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    More about this item

    Keywords

    International Development; Community/Rural/Urban Development; Consumer/Household Economics;

    JEL classification:

    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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