A Closer Look at the Mechanism of Structural Transformation: the Role of Land- versus Labor-Augmenting Technical Change in Agriculture

Arnaud Daymard ()

No 2018-11, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: This paper analyzes a simple two-sector model of structural change to illuminate the factor bias of technical change in the process of structural transformation. Both land- and labor-augmenting technical changes are effective when households enjoy food level consumption close to the level of subsistence. However, as the economy moves away from the state of subsistence, the absolute and relative effectiveness of land- and labor-augmenting technical changes depends on the elasticity of substitution between land and labor. Calibration of the model for today’s developing countries suggest that all countries can benefit from labor improvements but only some regions of the world will benefit from an emphasis on land improvements.

Keywords: structural transformation; agricultural productivity; technical change (search for similar items in EconPapers)
JEL-codes: O11 O13 O14 O33 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2018-11

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