Wages, Human Capital, and the Allocation of Labor across Sectors

Todd Schoellman and Berthold Herrendorf

No 364, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: We document for nine countries ranging from rich (Canada, U.S.) to poor (India, Indonesia) that average wages are higher in non–agriculture than in agriculture. We measure sectoral human capital and find that it accounts for the entire wage gap in the U.S. and most of the wage gaps elsewhere. We develop a multi–sector model that explains these finding if: (i) Mincer returns to schooling are equal in both sectors; (ii) more able workers sort into non–agriculture; (iii) distortions to the allocation of labor between sectors are negligible in the U.S. and small elsewhere.

Date: 2014
New Economics Papers: this item is included in nep-hrm, nep-lab and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed014:364

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