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On the Transition to Modern Growth: Lessons from Recent Agricultural Employment

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Abstract

We study a model where a single good can be produced using a diminishing-returns technology (Malthus) and a constant-returns technology (Solow). We map the Malthus technology to agriculture and show that the share of agricultural employment declines at a constant rate. Using a few recent observations on the share, we estimate the onset of transition for the U.S. and Western Europe without using output data. We show that output growth is higher after the estimated onset of transition than it is before. Our model implies that output growth during the transition is a first-order autoregressive process and that the rate of decline in the share of agricultural employment is a sufficient statistic for the autoregressive coefficient. Quantitatively, while there is no a priori reason that recent agricultural employment would pin down output dynamics over two centuries, the autoregressive coefficient is practically the same as the one implied by the decline in agricultural employment. This quantitative result holds for developing economies as well.

Suggested Citation

  • B. Ravikumar & Guillaume Vandenbroucke, 2023. "On the Transition to Modern Growth: Lessons from Recent Agricultural Employment," Working Papers 2023-026, Federal Reserve Bank of St. Louis, revised May 2024.
  • Handle: RePEc:fip:fedlwp:96849
    DOI: 10.20955/wp.2023.026
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    References listed on IDEAS

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    1. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 323-350, National Bureau of Economic Research, Inc.
    2. Jones Charles I., 2001. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(2), pages 1-45, August.
    3. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
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    More about this item

    Keywords

    Malthus; Solow; agricultural employment; economic transition;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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