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Why is Measured Productivity so Low in Agriculture?


  • Berthold Herrendorf
  • Todd Schoellman


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.

Suggested Citation

  • Berthold Herrendorf & Todd Schoellman, 2015. "Why is Measured Productivity so Low in Agriculture?," CESifo Working Paper Series 5484, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5484

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    Cited by:

    1. Diego Restuccia & Tasso Adamopoulos, 2012. "Land Reform and Productivity: A Quantitative Analysis with Micro Data," 2012 Meeting Papers 1083, Society for Economic Dynamics.
    2. Chaoran Chen, 2017. "Technology Adoption, Capital Deepening, and International Productivity Differences," Working Papers tecipa-584, University of Toronto, Department of Economics.
    3. Diego Restuccia & Tasso Adamopoulos, 2017. "Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data," 2017 Meeting Papers 1180, Society for Economic Dynamics.
    4. Le, Kien, 2018. "Land Use Restrictions, Misallocation in Agriculture, and Aggregate Productivity in Vietnam," MPRA Paper 90797, University Library of Munich, Germany.
    5. 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, Boston, Massachusetts 235914, Agricultural and Applied Economics Association.
    6. Wenbiao Cai, 2016. "Risk, Selection and Productivity Differences," Departmental Working Papers 2016-02, The University of Winnipeg, Department of Economics.
    7. 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.
    8. 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.
    9. Alonso-Carrera, Jaime & Raurich, Xavier, 2018. "Labor mobility, structural change and economic growth," Journal of Macroeconomics, Elsevier, vol. 56(C), pages 292-310.
    10. Porzio, Tommaso & Santangelo, Gabriella, 2017. "Structural Change and the Supply of Agricultural Workers," CEPR Discussion Papers 12495, C.E.P.R. Discussion Papers.
    11. Md. Rabiul Islam & Jakob B. Madsen, 2018. "Knowledge diffusion and agricultural development," Agricultural Economics, International Association of Agricultural Economists, vol. 49(2), pages 265-276, March.
    12. Artiom Volkov & Tomas Balezentis & Mangirdas Morkunas & Dalia Streimikiene, 2019. "Who Benefits from CAP? The Way the Direct Payments System Impacts Socioeconomic Sustainability of Small Farms," Sustainability, MDPI, Open Access Journal, vol. 11(7), pages 1-17, April.
    13. 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.

    More about this item


    mis-allocation of labor; productivity gaps; wage gaps;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General


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