Structural Transformation and the Agricultural Wage Gap

Jorge Alvarez

No 2017/289, IMF Working Papers from International Monetary Fund

Abstract: A key feature of developing economies is that wages in agriculture are significantly below those of other sectors. Using Brazilian household surveys and administrative panel data, I use information on workers who switch sectors to decompose the drivers of this gap. I find that most of the gap is explained by differences in worker composition. The evidence speaks against the existence of large short-term gains from reallocating workers out of agriculture and favors recently proposed Roy models of inter-sector sorting. A calibrated sorting model of structural transformation can account for the wage gap level observed and its decline as the economy transitioned out of agriculture.

Keywords: WP; appendix E; gap decline; Wage Gaps; Structural Transformation; Agriculture; Human Capital; Sorting; Productivity Gaps; Brazil; wage gap; gap level; wage difference; skilled worker; differential pay; wage gain; Agricultural sector; Wage gap; Wages; Manufacturing (search for similar items in EconPapers)
Pages: 53
Date: 2017-12-22
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Citations: View citations in EconPapers (1)

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