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Skill Investment, Farm Size Distribution and Agricultural Productivity

  • Cai, Wenbiao
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    This paper develops a general equilibrium model to quantitatively explain high labor share, low productivity and small farm size in agriculture in low income countries. The model features individual heterogeneity in skill that is augmentable over time and endogenous occupation choice. Calibrated to the U.S, the model can reproduce bulk of the observed variations in agriculture employment, agriculture output per worker and mean farm size across countries in the sample. In addition, the model generates endogenous farm size distributions that closely resemble the empirical counterpart for a large set of countries. Counterfactual exercises show TFP to be the main source of productivity differences.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26439.

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    Date of creation: 21 Oct 2010
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    Handle: RePEc:pra:mprapa:26439
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    1. Diego Restuccia & Richard Rogerson, 2007. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Working Papers tecipa-283, University of Toronto, Department of Economics.
    2. Douglas Gollin & Stephen Parente & Richard Rogerson, 2001. "Farm Work, Home Work and International Productivity Differences," Department of Economics Working Papers 2002-08, Department of Economics, Williams College.
    3. Tasso Adamopoulos & Diego Restuccia, 2014. "The Size Distribution of Farms and International Productivity Differences," American Economic Review, American Economic Association, vol. 104(6), pages 1667-97, June.
    4. Andrew Atkeson & Patrick J. Kehoe, 2005. "Modeling and measuring organization capital," Staff Report 291, Federal Reserve Bank of Minneapolis.
    5. Marla Ripoll & Juan Carlos Cordoba, 2006. "Agriculture and Aggregation," Working Papers 371, University of Pittsburgh, Department of Economics, revised Nov 2008.
    6. Xu Yi & Nezih Guner & Gustavo Ventura, 2005. "Macroeconomic Implications of Size Dependent Policies," 2005 Meeting Papers 530, Society for Economic Dynamics.
    7. Diego Restuccia & Dennis Tao Yang & Xiaodong Zhu, 2007. "Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Working Papers e07-3, Virginia Polytechnic Institute and State University, Department of Economics.
    8. Shenggen Fan & Connie Chan-Kang, 2005. "Is small beautiful? Farm size, productivity, and poverty in Asian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 135-146, 01.
    9. Vollrath, Dietrich, 2009. "How important are dual economy effects for aggregate productivity?," Journal of Development Economics, Elsevier, vol. 88(2), pages 325-334, March.
    10. Francesco Caselli, 2004. "Accounting for Cross-Country Income Differences," NBER Working Papers 10828, National Bureau of Economic Research, Inc.
    11. Douglas Gollin, 2001. "Nobody's Business but My Own: Self Employment and Small Enterprise in Economic Development," Center for Development Economics 172, Department of Economics, Williams College.
    12. Areendam Chanda & Carl-Johan Dalgaard, . "Dual Economies and International Total Factor Productivity Differences," Departmental Working Papers 2005-11, Department of Economics, Louisiana State University.
    13. Michael Waugh & David Lagakos, 2009. "Specialization, Economic Development and Aggregate Productivity Differences," 2009 Meeting Papers 1248, Society for Economic Dynamics.
    14. Dietrich Vollrath, 2007. "Land Distribution and International Agricultural Productivity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 202-216.
    15. Berthold Herrendorf & Akos Valentinyi, 2006. "Which Sectors Make the Poor Countries so Unproductive?," 2006 Meeting Papers 304, Society for Economic Dynamics.
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