Wages, Human Capital, and Structural Transformation

Berthold Herrendorf and Todd Schoellman

No 6426, CESifo Working Paper Series from CESifo

Abstract: Average wages are considerably lower in agriculture than in the other sectors. We document this fact for thirteen countries ranging from rich (Canada, U.S.) to poor (India, Indonesia). We develop a measure of human capital that accounts for the selection of workers with different unobserved skills into sectors. We find that differences in human capital account for most of the wage gaps. We develop a model that rationalizes this finding and that allows us to quantify the distortions to the allocation of labor. We find that they are considerably smaller than typically claimed in the literature.

Keywords: human capital gaps; misallocation of labor; wage gaps (search for similar items in EconPapers)
JEL-codes: O10 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-hrm, nep-sea and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6426

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