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Agricultural Productivity Differences and Credit Market Imperfections

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  • Nishida, Keigo

Abstract

This paper presents a simple model to examine the implication of credit market imperfections when considering the massive variation of agricultural labor productivity across countries. The development of credit markets enables more agents to acquire skills to work in non-agricultural sectors. The expansion of the sectors decreases the labor supply to agriculture as well as increases the supply of modern intermediate inputs to agriculture. Agricultural producers accordingly substitute the relatively cheap intermediate inputs for labor to produce a given level of an agricultural good, and, thereby, output per worker in agriculture is improved. Poor countries with less-developed credit markets are, therefore, far less productive in agriculture than rich countries with well-developed credit markets.

Suggested Citation

  • Nishida, Keigo, 2012. "Agricultural Productivity Differences and Credit Market Imperfections," MPRA Paper 38962, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38962
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    References listed on IDEAS

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    More about this item

    Keywords

    productivity; credit market imperfection; agriculture; skill acquisition; human capital investment; occupational choice;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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