Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata

Joan Hicks, Maria Kleemans, Nicholas Li, Edward Miguel

Research output: Working paper

Abstract

Recent research has pointed to large gaps in labor productivity between the agricultural and nonagricultural sectors in low-income countries, as well as between workers in rural and urban areas. Most estimates are based on national accounts or repeated cross-sections of micro-survey data, and as a result typically struggle to account for individual selection between sectors. This paper uses long-run individual-level panel data from two low-income countries (Indonesia and Kenya). Accounting for individual fixed effects leads to much smaller estimated productivity gains from moving into the nonagricultural sector (or urban areas), reducing estimated gaps by over 80%. Per capita consumption gaps are also small once individual fixed effects are included. Estimated productivity gaps do not emerge up to five years after a move between sectors. We evaluate whether these findings imply a re-assessment of the conventional wisdom regarding sectoral gaps, discuss how to reconcile them with existing cross-sectional estimates, and consider implications for the desirability of sectoral reallocation of labor.
Original languageEnglish (US)
Number of pages62
StatePublished - Mar 20 2017

Publication series

NameNBER Working Paper
No.w23253

Fingerprint

Micro data
Urban areas
Low-income countries
Fixed effects
Productivity gap
Agricultural productivity
Rural areas
Cross section
Survey data
Productivity
Panel data
Labour productivity
Wisdom
Labor
Kenya
Workers
Indonesia
Reallocation
National accounts

Cite this

Hicks, J., Kleemans, M., Li, N., & Miguel, E. (2017). Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata. (NBER Working Paper; No. w23253).

Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata. / Hicks, Joan; Kleemans, Maria; Li, Nicholas; Miguel, Edward.

2017. (NBER Working Paper; No. w23253).

Research output: Working paper

Hicks, J, Kleemans, M, Li, N & Miguel, E 2017 'Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata' NBER Working Paper, no. w23253.
Hicks J, Kleemans M, Li N, Miguel E. Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata. 2017 Mar 20. (NBER Working Paper; w23253).
Hicks, Joan ; Kleemans, Maria ; Li, Nicholas ; Miguel, Edward. / Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata. 2017. (NBER Working Paper; w23253).
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