Industrialization without Innovation

Paula Bustos (), Juan Manuel Castro-Vincenzi, Joan Monras and Jacopo Ponticelli
Authors registered in the RePEc Author Service: Juan Manuel Castro Vincenzi

No 25871, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The introduction of labor-saving technologies in agriculture can foster structural transformation by releasing workers who find occupation in other sectors. The traditional view is that the reallocation of labor towards manufacturing generates innovation and productivity growth. We conduct an empirical investigation of this structural transformation process in the context of a large and exogenous increase in agricultural productivity in Brazil. We find that workers leaving agriculture were mostly unskilled. Thus, they found employment in the least skill-intensive manufacturing industries. Next, we investigate the effect of this change in comparative advantage within the manufacturing sector on innovation. We use social security data to develop a new measure of the labor input in innovation that is representative at any level of spatial aggregation. We find that regions with faster agricultural productivity growth experienced a reallocation of unskilled workers away from agriculture into the least R&D-intensive manufacturing industries. The expansion of low-R&D industries attracted workers away from innovative occupations in high-R&D industries, slowing down local aggregate manufacturing productivity growth.

JEL-codes: F1 F16 F43 O1 O13 O4 (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-gro and nep-tid
Note: DEV ITI
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Industrialization without Innovation (2024)
Working Paper: Industrialization without Innovation (2018)
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