Structural Transformation and the Agricultural Wage Gap
IMF Working Papers, December 22, 2017
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- Structural Transformation and the Agricultural Wage Gap
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Bibliographic details
- Authors: Jorge A Alvarez
- Published: December 22, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484335444.001
Overview and publication
- Title: Structural Transformation and the Agricultural Wage Gap
- Author: Jorge A Alvarez
- Publication date: December 22, 2017
- Series: Working Paper No. 2017/289
- Issue: 289
- Volume: 2017
- Pages: 53
- DOI: https://doi.org/10.5089/9781484335444.001
- ISBN: 9781484335444
- ISSN: 1018-5941
Research question and data
- Research question:
- Why are wages in agriculture significantly below those of other sectors in developing economies?
- Data sources:
- Brazilian household surveys
- Administrative panel data
- Empirical strategy:
- Use information on workers who switch sectors to decompose the drivers of the agricultural wage gap
Key findings
- The agricultural wage gap is a prominent feature of developing economies: wages in agriculture are significantly below those of other sectors.
- Most of the agricultural wage 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.
- Results favor recently proposed Roy models of inter-sector sorting.
- A calibrated sorting model of structural transformation can account for:
- the wage gap level observed
- the decline of the wage gap as the economy transitioned out of agriculture
Subjects and keywords (as listed)
- Subjects: Agricultural sector, Economic sectors, Labor, Manufacturing, Wage gap, Wages
- Keywords: Agricultural sector, Agriculture, appendix E, Brazil, differential pay, gap decline, gap level, Human Capital, Manufacturing, Productivity Gaps, skilled worker, Sorting, Structural Transformation, wage difference, wage gain, wage gap, Wage gap, Wage Gaps, Wages, WP
Implications and interpretation
- Composition effects among workers are the dominant explanation for the observed wage gap between agriculture and other sectors.
- Policies aimed solely at reallocating workers from agriculture to other sectors may not generate large short-term wage gains if composition differences persist.
- Models of inter-sector sorting (Roy models) and calibrated sorting frameworks are useful for explaining both the level and temporal decline of the agricultural wage gap during structural transformation.
IMF Working Paper No. 2017/289 — Jorge A Alvarez (December 22, 2017)
Content in this bundle
- Structural Transformation and the Agricultural Wage Gap, WP/17/289, December 2017