The Agricultural Wage Gap: Evidence from Brazilian Micro-Data

68 Pages Posted: 19 Apr 2017 Last revised: 19 Jan 2018

See all articles by Jorge Alvarez

Jorge Alvarez

International Monetary Fund (IMF)

Date Written: January 19, 2018

Abstract

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 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 can account for the wage gap level observed and its decline as the economy transitioned out of agriculture.

Keywords: Wage Gaps, Agriculture, Structural Transformation, Human Capital, Sorting, Productivity Gaps, Brazil.

JEL Classification: E24, J31, J43, J61, O11, O13, O18, O41

Suggested Citation

Alvarez, Jorge, The Agricultural Wage Gap: Evidence from Brazilian Micro-Data (January 19, 2018). Available at SSRN: https://ssrn.com/abstract=2954084 or http://dx.doi.org/10.2139/ssrn.2954084

Jorge Alvarez (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

HOME PAGE: http://https://sites.google.com/site/jalvarezecon/

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