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The Agricultural Productivity Gap in Europe

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  • Wenbiao Cai
  • Manish Pandey

Abstract

For fifteen European countries over the 1970-2004 period we establish that there is a large and persistent agricultural productivity gap, the ratio of labor productivity in non-agriculture to that in agriculture. Correcting for under-reporting of self-employment income in both agriculture and non-agriculture significantly reduces the measured agricultural productivity gap. For countries with information on years of school and experience at the sector level, we also find substantially higher human capital in non-agriculture than in agriculture. Our findings suggest that measured labor productivity differences between agriculture and non-agriculture in European countries are not an indicator of resource misallocation, but possibly an artifact of mismeasurement of value added and sectoral differences in human capital.

Suggested Citation

  • Wenbiao Cai & Manish Pandey, 2013. "The Agricultural Productivity Gap in Europe," Departmental Working Papers 2013-05, The University of Winnipeg, Department of Economics.
  • Handle: RePEc:win:winwop:2013-05
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    Cited by:

    1. Cai, Wenbiao, 2015. "Structural change accounting with labor market distortions," Journal of Economic Dynamics and Control, Elsevier, vol. 57(C), pages 54-64.
    2. Wenbiao Cai, 2016. "Risk, Selection and Productivity Differences," Departmental Working Papers 2016-02, The University of Winnipeg, Department of Economics.
    3. Jan Trenczek, 2016. "Promoting Growth-Enhancing Structural Change: Evidence from a Panel of African, Asian, and Latin American Countries," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 207, Courant Research Centre PEG.
    4. Nowak, Anna & Kijek, Tomasz, 2016. "The effect of human capital on labour productivity of farms in Poland," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 118(1), April.
    5. Czyżewski, Bazyli & Poczta-Wajda, Agnieszka, 2016. "Effects of Policy and Market on Relative Income Deprivation of Agricultural Labour," 160th Seminar, December 1-2, 2016, Warsaw, Poland 249759, European Association of Agricultural Economists.

    More about this item

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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