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Does Schooling Cause Structural Transformation?

Tommaso Porzio and Gabriella Santangelo

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We study how the global schooling increase during the 20th century affected structural transformation by changing the supply of agricultural labor. We develop an analytical model of frictional labor reallocation out of agriculture to infer changes in birth-cohort characteristics from observed data on agricultural employment. Bringing the model to microdata from 52 countries, we find that the increase in schooling was accompanied by a large shift of the labor force’s comparative advantage away from agriculture. We bring empirical evidence to suggest this relationship was causal. With fixed prices, the resulting decrease in the supply of agricultural workers can account for almost half of the observed reallocation out of agriculture. However, in general equilibrium, the net effect is ambiguous.

Keywords: Development; Education; Human Capital; Skills; Occupational Choice; Labor Force Demographics; Schooling; Skill Biased; Labor Mobility; Cross Country Development; Structural Transformation; Agriculture (search for similar items in EconPapers)
JEL-codes: E23 E24 I25 J21 J23 J24 J62 O11 O12 O15 Q11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-hrm, nep-lma and nep-mac
Date: 2019-02-24
Note: gs578
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