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Structural Transformation and the Agricultural Wage Gap

Author

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  • Mr. Jorge A Alvarez

Abstract

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.

Suggested Citation

  • Mr. Jorge A Alvarez, 2017. "Structural Transformation and the Agricultural Wage Gap," IMF Working Papers 2017/289, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/289
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    Cited by:

    1. Rana Hasan & Rhea Molato, 2019. "Wages Over the Course of Structural Transformation: Evidence from India," Asian Development Review, MIT Press, vol. 36(2), pages 131-158, September.

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