Working Paper: NBER ID: w19628
Authors: Douglas Gollin; David Lagakos; Michael E. Waugh
Abstract: According to national accounts data, value added per worker is much higher in the non-agricultural sector than in agriculture in the typical country, and particularly so in developing countries. Taken at face value, this "agricultural productivity gap" suggests that labor is greatly misallocated across sectors. In this paper, we draw on new micro evidence to ask to what extent the gap is still present when better measures of sector labor inputs and value added are taken into consideration. We find that even after considering sector differences in hours worked and human capital per worker, as well as alternative measures of sector output constructed from household survey data, a puzzlingly large gap remains.
Keywords: Agricultural Productivity; Labor Allocation; Value Added
JEL Codes: E01; E24; J61; O11; O13; O15; O18; O41; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| labor misallocation across sectors (J49) | agricultural productivity gap (O49) |
| adjusting for sector differences in hours worked and human capital (J29) | reduction in agricultural productivity gap (Q16) |
| lower quality institutions (I24) | larger productivity gaps (O49) |
| remaining gaps warrant further investigation (Y50) | policy measures necessary to encourage labor reallocation (J68) |