The importance of specification choices when analyzing sectoral productivity gaps

Joshua D. Merfeld and Peter Brummund

Agricultural Economics, 2022, vol. 53, issue 4, 605-616

Abstract: A consistent finding in the development literature is that average non‐farm labor productivity is higher than average farm labor productivity. These differences in average productivity are sometimes used to promote policies which advance the non‐farm sector. In this article, we analyze the importance of two specification choices when comparing productivity gaps, using detailed household panel data from Malawi. Importantly, we are able to calculate both average revenue products (ARPLs)—similar to most of the sectoral productivity gap literature—as well as marginal revenue products (MRPLs). We show that the choice of productivity measure combined with the choice of production function specification can lead to different sectoral productivity rankings. MRPLs from translog production functions suggest the household farm sector is more productive than the household non‐farm sector, while MRPLs from a Cobb‐Douglas and ARPLs from both a translog and a Cobb‐Douglas find the opposite ranking.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/agec.12692

Related works:
Working Paper: The Importance of Specification Choices When Analyzing Sectoral Productivity Gaps (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:agecon:v:53:y:2022:i:4:p:605-616

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0169-5150

Access Statistics for this article

Agricultural Economics is currently edited by W.A. Masters and G.E. Shively

More articles in Agricultural Economics from International Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().