Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis

Diego Restuccia (), Dennis Tao Yang and Xiaodong Zhu ()

Working Papers from Virginia Polytechnic Institute and State University, Department of Economics

Abstract: A decomposition of aggregate labor productivity based on internationally comparable data reveals that a high share of employment and low labor productivity in agriculture are mainly responsible for low aggregate productivity in poor countries. Using a two-sector general-equilibrium model, we show that differences in economy-wide productivity, barriers to modern intermediate inputs in agriculture, and barriers in the labor market generate large cross-country di?erences in the share of employment and labor productivity in agriculture. The model implies a factor difference of 10.8 in aggregate labor productivity between the richest and the poorest 5 percent of the countries in the world, leaving the unexplained factor at 3.2. Overall, this two-sector framework performs much better than a single-sector growth model in explaining observed differences in international productivity.

Keywords: Productivity; International Comparisons; Agriculture; Intermediate Inputs; Barriers; Two-sector Model (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-eff
Date: 2007
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ftp://repec.econ.vt.edu/Papers/Yang/RYZ_July2007.pdf First version, 2007 (application/pdf)

Related works:
Working Paper: Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis (2003)
Journal Article: Agriculture and aggregate productivity: A quantitative cross-country analysis (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:vpi:wpaper:e07-3

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