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Title: Skill Accumulation and Sectoral Productivity Differences Across Countries

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: Cross-country differences in output per worker in agriculture are twice as large as those in the aggregate, and 10 times larger than those in non-agriculture. This paper presents a model that can quantitatively account for these observations. The model features endogenous skill accumulation in a two-sector, life cycle version of the Roy(1951) model of self-selection. Aggregate barriers like low total factor productivity(TFP) reduce labor quality in agriculture by distorting the allocation of skills betweensectors, and by discouraging skill accumulation. A calibrated version of the model generates cross-country labor productivity differences in agriculture that are 1.8 times larger than those in the aggregate, and 5.7 times larger than those in non-agriculture. The model also captures salient features of the size distribution of farms in poor countries without appealing to farm level distortions.

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Authors: Cai, Wenbiao

Publisher: University of Iowa

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

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