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STRUCTURAL CHANGE OUT OF AGRICULTURE: LABOR PUSH VERSUS LABOR PULL

Francisco Alvarez-Cuadrado () and Markus Poschke ()

Departmental Working Papers from McGill University, Department of Economics

Abstract: The process of economic development is characterized by substantial rural-urban migrations and a decreasing share of agriculture in output and employment. The literature highlights two main engines behind this process of structural change: (i) improvements in agricultural technology combined with the effect of Engel's law of demand push resources out of the agricultural sector (the "labor push" hypothesis), and (ii) improvements in industrial technology attract labor into this sector (the "labor pull" hypothesis). We present a simple model that features both channels and use it to explore their relative importance. We evaluate the U.S. time series since 1800 and a sample of 13 industrialized countries starting in the 19th century. Our results suggest that, on average, the "labor pull" channel dominates. This contrasts to popular modeling choices in the recent literature.

JEL-codes: O11 O41 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009-06
New Economics Papers: this item is included in nep-agr and nep-lab
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Related works:
Journal Article: Structural Change Out of Agriculture: Labor Push versus Labor Pull (2011) Downloads
Working Paper: Structural Change out of Agriculture: Labor Push versus Labor Pull (2009) Downloads
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