Structural Transformation and the Agricultural Wage Gap

Download or read book Structural Transformation and the Agricultural Wage Gap written by Jorge Alvarez and published by International Monetary Fund. This book was released on 2017-12-22 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.