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The Human Side of Structural Transformation

Author

Listed:
  • Tommaso Porzio
  • Federico Rossi
  • Gabriella V. Santangelo

Abstract

We document that nearly half of the global decline in agricultural employment during the 20th-century was driven by new cohorts entering the labor market. A newly compiled dataset of policy reforms supports an interpretation of these cohort effects as human capital. Through the lens of a model of frictional labor reallocation, we conclude that human capital growth, both as a mediating factor and as an independent driver, led to a sharp decline in the agricultural labor supply. This decline accounts, at fixed prices, for 40% of the decrease in agricultural employment. This aggregate effect is roughly halved in general equilibrium.

Suggested Citation

  • Tommaso Porzio & Federico Rossi & Gabriella V. Santangelo, 2021. "The Human Side of Structural Transformation," NBER Working Papers 29390, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29390
    Note: DEV ED EFG LS
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    Citations

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    Cited by:

    1. Guaitoli, Gabriele & Pancrazi, Roberto, 2024. "Age-Income Gaps," The Warwick Economics Research Paper Series (TWERPS) 1504, University of Warwick, Department of Economics.
    2. Mahesh Karra & Joshua Wilde, 2024. "Economic Foundations of Contraceptive Transitions: Theories and a Review of the Evidence," Population and Development Review, The Population Council, Inc., vol. 50(S2), pages 539-569, December.
    3. Mensah, Emmanuel B., 2020. "Is sub-Saharan Africa deindustrializing?," MERIT Working Papers 2020-045, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Maxwell Mkondiwa, 2023. "Is wealth found in the soil or in the brain? Investing in farm people in Malawi," Review of Development Economics, Wiley Blackwell, vol. 27(1), pages 134-157, February.
    5. Juan Felipe Riaño & Felipe Valencia Caicedo, 2024. "Collateral Damage: The Legacy of the Secret War in Laos," The Economic Journal, Royal Economic Society, vol. 134(661), pages 2101-2140.
    6. Feng, Ying & Ren, Jie, 2023. "Skill bias, financial frictions, and selection into entrepreneurship," Journal of Development Economics, Elsevier, vol. 162(C).
    7. William Bednar & Nick Pretnar, 2019. "Home Production with Time to Consume," 2019 Meeting Papers 328, Society for Economic Dynamics.
    8. Michael Peters, 2022. "Market Size and Spatial Growth—Evidence From Germany's Post‐War Population Expulsions," Econometrica, Econometric Society, vol. 90(5), pages 2357-2396, September.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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