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Title: Structural Change and the Supply of Agricultural Workers

Citation Type: Working Paper

Publication Year: 2017

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Abstract: What explains labor reallocation out of agriculture? We show that decreases in the supply of agricultural workers, due to younger birth-cohorts having skills which are more valued out of agriculture, play a major, and previously overlooked, role. First, we use micro data from 52 countries to decompose aggregate labor reallocation into year and cohort effects. Cohort effects accounts for more than half of overall reallocation. Then, we develop an overlapping generations model to provide an analytical and parsimonious map from the statistical objects, year and cohort effects, into the structural objects of interest, demand and supply of agricultural workers. The map is modulated by mobility frictions and general equilibrium, which we discipline with micro data. Filtering the data through the model, we conclude that decreases in the supply of agricultural workers account for a sizable fraction, approximately one third, of labor reallocation. Finally, we show that, both within and across countries, larger increases in schooling across cohorts are correlated with faster reallocation out of agriculture, suggesting that human capital determines the supply of agricultural workers. We provide further, and causal, evidence on the role of human capital by showing that a school construction program in Indonesia led to labor reallocation out of agriculture.

Url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3089710

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Authors: Porzio, Tommaso; Santangelo, Gabriella

Series Title: CEPR Discussion Paper

Publication Number: 12495

Institution: CEPR

Pages:

Publisher Location: Washington, D.C.

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

Countries: United States