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Measuring Aggregate Agricultural Labor Effort in Dual Economies

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  • Dietrich Vollrath

Abstract

Wide differences in labor productivity are observed between agriculture and industry in most developing countries. Research suggests that these differences - often denoted a “dual economy” effect — can explain a significant portion of low output per capita levels in these countries. A central input to the labor productivity calculation is the aggregate labor effort in the agricultural sector. Using findings from the Rural Income Generating Activity (RIGA) database, I reconsider the measure of labor productivity in agriculture and industry. I use several methods to extract information on labor effort and human capital from the household data in RIGA, and this is used to estimate the aggregate labor effort in the agricultural sector. With these new estimates, dual economy effects are found to be less severe for most of the RIGA countries. Using these estimates to adjust a wider sample of country-level data shows that the share of variation in output per capita explained by dual economy effects is around half of previous estimates. Copyright Eurasia Business and Economics Society 2013

Suggested Citation

  • Dietrich Vollrath, 2013. "Measuring Aggregate Agricultural Labor Effort in Dual Economies," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 3(1), pages 39-58, June.
    • Handle: RePEc:spr:eurase:v:3:y:2013:i:1:p:39-58
    DOI: 10.14208/BF03353840
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    More about this item

    Keywords

    Dual Economy; Agricultural Labor Productivity; Aggregate Productivity; O12; O15; O47; O57; J31;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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