Agricultural composition and labor productivity

Cesar Blanco and Xavier Raurich

Journal of Development Economics, 2022, vol. 158, issue C

Abstract: Labor productivity differences between developing and developed countries are much larger in agriculture than in non-agriculture. We show that differences in agricultural composition across countries explain a substantial part of these labor productivity differences. To this end, we group agricultural products into two sectors: capital-intensive and labor-intensive agriculture. As the economy develops and capital accumulates, the price of labor-intensive agricultural goods relative to capital-intensive agricultural goods increases. This price change drives a process of structural change that moves land and farmers to the capital-intensive sector, increasing labor productivity in agriculture. We illustrate this mechanism using a multisector growth model that generates transitional dynamics consistent with patterns of structural change observed in Brazil and also differences in agricultural composition and labor productivity consistent with cross-country data.

Keywords: Structural change; Agricultural composition; Labor productivity; Capital intensity; Cross-country (search for similar items in EconPapers)
JEL-codes: O11 O13 O41 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Agricultural Composition and Labor Productivity (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:158:y:2022:i:c:s0304387822000876

DOI: 10.1016/j.jdeveco.2022.102934

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