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Structural Transformation and the Agricultural Wage Gap
Author:
Mr. Jorge A Alvarez 0000000404811396 https://isni.org/isni/0000000404811396 International Monetary Fund

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Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 289
Language:
English
Publication Date:
22 Dec 2017
DOI:
https://doi.org/10.5089/9781484335444.001
ISBN:
9781484335444
ISSN:
1018-5941
Pages:
53
Keywords:
WP; appendix E; gap decline; Wage Gaps; Structural Transformation; Agriculture; Human Capital; Sorting; Productivity Gaps; Brazil; wage gap; gap level; wage difference; skilled worker; differential pay; wage gain; Agricultural sector; Wage gap; Wages; Manufacturing
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2017: Issue 289