Agricultural productivity and the sectoral reallocation of labor in rural India
Journal of Development Economics, 2018, vol. 135, issue C, 488-503
How do shocks to agricultural productivity affect the allocation of labor across sectors of the economy? To answer this, I use data from rural India to show that exogenous increases in agricultural productivity — caused by abnormally high levels of precipitation — lead to an increase in the labor share of the non-agricultural sector. I further show that the non-tradable sector expands significantly when agricultural output increases. This evidence is consistent with increasing agricultural output causing increased demand for local non-tradables, which in turn increases the non-agricultural labor share.
Keywords: Agricultural productivity; Labor allocation (search for similar items in EconPapers)
JEL-codes: Q10 O13 J43 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:135:y:2018:i:c:p:488-503
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