 The agricultural productivity gap: Informality mattersRajveer Jat and Bharat Ramaswami Journal of Development Economics, 2026, vol. 178, issue C Abstract: The measured agricultural productivity gap (APG) in developing countries typically compares agriculture with the entire non-farm economy, implicitly treating the latter as homogeneous. In developing countries, most non-farm employment is informal, concentrated in small, unregistered enterprises with low productivity. This paper compares the productivity of agriculture to the informal and formal non-farm sectors in India. Using Indian sectoral data from the India KLEMS database linked with nationally representative labor surveys, we decompose the non-farm economy into formal and informal segments and adjust productivity measures for differences in hours worked, human capital, and labor's share of value-added. We find that the APG is almost entirely driven by the small formal non-farm sector. The gap with the informal sector is negligible. Between 63 and 75 % of non-farm workers are in informal employment dominated industries that are not more productive than agriculture. These results reframe the APG as a formal–informal divide. Keywords: Agricultural productivity gap; Informal sector; India (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:178:y:2026:i:c:s0304387825001683 DOI: 10.1016/j.jdeveco.2025.103617 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.