Selection, Absolute Advantage, and the Agricultural Productivity Gap

Francisco Alvarez-Cuadrado, Francesco Amodio and Markus Poschke

Journal of Political Economy Macroeconomics, 2026, vol. 4, issue 3, 513 - 562

Abstract: Output per worker is lower in agriculture than in other sectors, especially in poor countries. Worker sorting can explain this fact if comparative and absolute advantage in agriculture are positively correlated. We examine this correlation using representative household-level panel data from four African countries. Approximately one-third of households engage in both agriculture and nonfarm entrepreneurship, providing a unique lens to study sorting patterns. We find that more productive farming households are more likely to pursue entrepreneurship, allocate more time to it, and increasingly transition into it over time. These findings suggest that agricultural comparative and absolute advantage are negatively correlated.

Date: 2026
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