Structural Transformation and the Agricultural Wage Gap
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Summary:
A key feature of developing economies is that wages in agriculture are significantly below those of other sectors. Using Brazilian household surveys and administrative panel data, I use information on workers who switch sectors to decompose the drivers of this gap. I find that most of the gap is explained by differences in worker composition. The evidence speaks against the existence of large short-term gains from reallocating workers out of agriculture and favors recently proposed Roy models of inter-sector sorting. A calibrated sorting model of structural transformation can account for the wage gap level observed and its decline as the economy transitioned out of agriculture.
Series:
Working Paper No. 2017/289
Subject:
Agricultural sector Economic sectors Labor Manufacturing Wage gap Wages
English
Publication Date:
December 22, 2017
ISBN/ISSN:
9781484335444/1018-5941
Stock No:
WPIEA2017289
Pages:
53
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