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Why is Measured Productivity so Low in Agriculture?

  • Todd Schoellman

    (Arizona State University)

  • Berthold Herrendorf

    (Arizona State University)

It is well known that poor countries are much less productive in agriculture than in the rest of the economy, and that it is hard to account for these productivity gaps. In this paper, we study US states during 1980–2009. We find that there are large productivity gaps between agriculture and non–agriculture. These productivity gaps are not at all accounted for by gaps in real wages per efficiency unit, which are similar in the two sectors. Instead, they are accounted for by two key factors: human capital is much higher in non–agriculture; and value added is seriously mis–measured in agriculture.

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Paper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 75.

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Date of creation: 2012
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Handle: RePEc:red:sed012:75
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  1. Cristina Echevarria, 2005. "A Three Factor Agricultural Production Function: The Case of Canada," Microeconomics 0510011, EconWPA.
  2. Berthold Herrendorf & Arilton Teixeira, . "Barriers to Entry and Development," Working Papers 2167726, Department of Economics, W. P. Carey School of Business, Arizona State University.
  3. Hayami, Yujiro & Ruttan, Vernon W, 1970. "Agricultural Productivity Differences Among Countries," American Economic Review, American Economic Association, vol. 60(5), pages 895-911, December.
  4. Tasso Adamopoulos & Diego Restuccia, 2011. "The Size Distribution of Farms and International Productivity Differences," Working Papers tecipa-441, University of Toronto, Department of Economics.
  5. Xu Yi & Nezih Guner & Gustavo Ventura, 2005. "Macroeconomic Implications of Size Dependent Policies," 2005 Meeting Papers 530, Society for Economic Dynamics.
  6. Fishelson, Gideon, 1974. "Relative Shares of Labor and Capital in Agriculture: A Subarid Area Israel, 1952-1969," The Review of Economics and Statistics, MIT Press, vol. 56(3), pages 348-52, August.
  7. Douglas Gollin, 2012. "The Agricultural Productivity Gap in Developing Countries," 2012 Meeting Papers 510, Society for Economic Dynamics.
  8. Lilyan E. Fulginiti & Richard K. Perrin, 1992. "Prices and Productivity in Agriculture," Center for Agricultural and Rural Development (CARD) Publications 93-gatt2, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  9. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers 2001-11, Department of Economics, Williams College.
  10. 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.
  11. Diego Restuccia & Richard Rogerson, 2007. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," NBER Working Papers 13018, National Bureau of Economic Research, Inc.
  12. Vollrath, Dietrich, 2009. "How important are dual economy effects for aggregate productivity?," Journal of Development Economics, Elsevier, vol. 88(2), pages 325-334, March.
  13. Mundlack, Yair & Larson, Donald F. & Butzer, Rita, 2002. "Determinants of agricultural growth in Indonesia, the Philippines, and Thailand," Policy Research Working Paper Series 2803, The World Bank.
  14. Barbara J. Craig & Philip G. Pardey & Johannes Roseboom, 1997. "International Productivity Patterns: Accounting for Input Quality, Infrastructure, and Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1064-1076.
  15. David Lagakos & Michael E. Waugh, 2013. "Selection, Agriculture, and Cross-Country Productivity Differences," American Economic Review, American Economic Association, vol. 103(2), pages 948-80, April.
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