Working Paper: NBER ID: w23021
Authors: Xinshen Diao; Kenneth Harttgen; Margaret McMillan
Abstract: Using data from the Groningen Growth and Development Center’s Africa Sector Database and the Demographic and Health Surveys, we show that much of Africa’s recent growth and poverty reduction has been associated with a substantive decline in the share of the labor force engaged in agriculture. This decline is most pronounced for rural females over the age of 25 who have a primary education; it has been accompanied by a systematic increase in the productivity of the labor force, as it has moved from low productivity agriculture to higher productivity services and manufacturing. We also show that although the employment share in manufacturing is not expanding rapidly, in most of the low-income African countries, the employment share in manufacturing has not peaked and is still expanding, albeit from very low levels. More work is needed to understand the implications of these shifts in employment shares for future growth and development in Africa south of the Sahara.
Keywords: Structural Change; Agricultural Employment; Labor Productivity; Economic Growth; Africa
JEL Codes: O11; O40; O55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decline in agricultural employment (J43) | Increase in overall labor productivity (O49) |
| Labor shifts from agriculture to higher productivity sectors (O49) | Increase in overall labor productivity (O49) |
| Decline in agricultural employment (J43) | Economic growth (O49) |
| Labor moving from agriculture to services and manufacturing (O14) | Increase in overall productivity of the labor force (J24) |
| Decrease in share of labor in agriculture (J43) | Increase in shares in manufacturing and services (O14) |