Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata

62 Pages Posted: 20 Mar 2017 Last revised: 14 Jan 2022

See all articles by Joan Hicks

Joan Hicks

University of California, Berkeley - Center for Effective Global Action (CEGA)

Marieke Kleemans

University of Illinois at Urbana-Champaign - Department of Economics

Nicholas Li

University of California, Berkeley

Edward Miguel

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 2017

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.

Suggested Citation

Hicks, Joan and Kleemans, Marieke and Li, Nicholas and Miguel, Edward, Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata (March 2017). NBER Working Paper No. w23253, Available at SSRN: https://ssrn.com/abstract=2937523

Joan Hicks (Contact Author)

University of California, Berkeley - Center for Effective Global Action (CEGA) ( email )

207 Giannini Hall
Berkeley, CA 94720-3310
United States

Marieke Kleemans

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
1407 W. Gregory
Urbana, IL 61801
United States

Nicholas Li

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Edward Miguel

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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