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Wages, Human Capital, and Barriers to Structural Transformation

Berthold Herrendorf () and Todd Schoellman ()

American Economic Journal: Macroeconomics, 2018, vol. 10, issue 2, 1-23

Abstract: We document for 13 countries ranging from rich (Canada, United States) to poor (India, Indonesia) that average wages are considerably lower in agriculture than in the other sectors. Moreover, agriculture has less educated workers and lower Mincer returns. We view these findings through the lens of a multi-sector model in which workers differ in observed and unobserved characteristics and sectors differ in their human-capital intensities. We derive expressions for the implied barriers to the reallocation of labor out of agriculture. We find that in our sample these barriers are considerably smaller than what the macro-development literature has argued.

JEL-codes: J24 J31 J43 O13 O15 Q10 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/mac.20160236
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