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

Listed author(s):
  • Todd Schoellman

    (Arizona State University)

  • Berthold Herrendorf

    (Arizona State University)

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.

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File URL: https://economicdynamics.org/meetpapers/2014/paper_364.pdf
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Paper provided by Society for Economic Dynamics in its series 2014 Meeting Papers with number 364.

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Date of creation: 2014
Handle: RePEc:red:sed014:364
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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  1. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  2. Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
  3. Berthold Herrendorf & Todd Schoellman, 2015. "Why is Measured Productivity so Low in Agriculture?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 1003-1022, October.
  4. Mike Waugh & David Lagakos & Doug Gollin, 2011. "The Agricultural Productivity Gap in Developing Countries," 2011 Meeting Papers 1397, Society for Economic Dynamics.
  5. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  6. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-258, June.
  7. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
  8. Binelli Chiara, 2015. "How the wage-education profile got more convex: evidence from Mexico," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 509-560, July.
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