Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata

Joan Hamory Hicks, Marieke Kleemans, Nicholas Y. Li and Edward Miguel

No 23253, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent research has pointed to large gaps in labor productivity between the agricultural and nonagricultural sectors in low-income countries, as well as between workers in rural and urban areas. Most estimates are based on national accounts or repeated cross-sections of micro-survey data, and as a result typically struggle to account for individual selection between sectors. This paper uses long-run individual-level panel data from two low-income countries (Indonesia and Kenya). Accounting for individual fixed effects leads to much smaller estimated productivity gains from moving into the nonagricultural sector (or urban areas), reducing estimated gaps by over 80%. Per capita consumption gaps are also small once individual fixed effects are included. Estimated productivity gaps do not emerge up to five years after a move between sectors. We evaluate whether these findings imply a re-assessment of the conventional wisdom regarding sectoral gaps, discuss how to reconcile them with existing cross-sectional estimates, and consider implications for the desirability of sectoral reallocation of labor.

JEL-codes: J43 O13 O15 R23 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-agr, nep-eff, nep-lma and nep-sea
Note: DEV EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

Published as Joan Hamory & Marieke Kleemans & Nicholas Y Li & Edward Miguel, 2021. "Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata," Journal of the European Economic Association, European Economic Association, vol. 19(3), pages 1522-1555.

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Journal Article: Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata (2021)
Working Paper: Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata (2017)
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