Agricultural Productivity and Structural Change: Is Relative Sectoral Price the Mirror Image of Relative Sectoral Productivity?

Kausik Gangopadhyay and Debasis Mondal

No 257, Working papers from Indian Institute of Management Kozhikode

Abstract: We have examined the role of sectoral productivity in explaining the process of structural change and relative sectoral prices. Our simple two- sector general equilibrium model demonstrates that an improvement in agricultural productivity can relocate labour away from this sector. Contrary to the conventional wisdom that relative sectoral prices are a mirror image of relative sectoral productivities, we showed a U-shaped relation- ship between them. We estimated our model parameters using the simu- lated method of moments. Our model could largely replicate the farm versus non-farm relative price movement and the agricultural labour share of US economic history. JEL Classification: F43, O11, O41. Key Words: Agricultural productivity, Structural transformation, manufacturing productivity, Terms

Keywords: Agricultural; Productivity (search for similar items in EconPapers)
Pages: 56 pages
Date: 2018-03
New Economics Papers: this item is included in nep-cse and nep-int
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