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Wages, Human Capital, and the Allocation of Labor across Sectors

Author

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  • Todd Schoellman

    (Arizona State University)

  • Berthold Herrendorf

    (Arizona State University)

Abstract

We document for nine countries ranging from rich (Canada, U.S.) to poor (India, Indonesia) that average wages are higher in non–agriculture than in agriculture. We measure sectoral human capital and find that it accounts for the entire wage gap in the U.S. and most of the wage gaps elsewhere. We develop a multi–sector model that explains these finding if: (i) Mincer returns to schooling are equal in both sectors; (ii) more able workers sort into non–agriculture; (iii) distortions to the allocation of labor between sectors are negligible in the U.S. and small elsewhere.

Suggested Citation

  • Todd Schoellman & Berthold Herrendorf, 2014. "Wages, Human Capital, and the Allocation of Labor across Sectors," 2014 Meeting Papers 364, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:364
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    References listed on IDEAS

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    Cited by:

    1. Alonso-Carrera, Jaime & Raurich, Xavier, 2018. "Labor mobility, structural change and economic growth," Journal of Macroeconomics, Elsevier, vol. 56(C), pages 292-310.

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