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Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata

Author

Listed:
  • Joan Hamory Hicks
  • Marieke Kleemans
  • Nicholas Y. Li
  • Edward Miguel

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.

Suggested Citation

  • Joan Hamory Hicks & Marieke Kleemans & Nicholas Y. Li & Edward Miguel, 2017. "Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata," NBER Working Papers 23253, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23253
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. Imbert, Clément & Papp, John, 2018. "Costs and Benets of Seasonal Migration : Evidence from India," The Warwick Economics Research Paper Series (TWERPS) 1161, University of Warwick, Department of Economics.

    More about this item

    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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