IMF Working Papers

Structural Transformation and the Agricultural Wage Gap

By Jorge A Alvarez

December 22, 2017

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Jorge A Alvarez. Structural Transformation and the Agricultural Wage Gap, (USA: International Monetary Fund, 2017) accessed September 18, 2024

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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.

Subject: 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

Publication Details

  • Pages:

    53

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

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  • Series:

    Working Paper No. 2017/289

  • Stock No:

    WPIEA2017289

  • ISBN:

    9781484335444

  • ISSN:

    1018-5941