The Dynamics of Agricultural Productivity Gaps: An Open-Economy Perspective

This paper draws on cross-country census data to study how agricultural productivity gaps have evolved over the last four decades. We find little tendency for gaps to decline on average despite global decreases in agricultural employment shares. We analyze the dynamics of agricultural productivity gaps through the lens of an open-economy model of structural change. We calibrate the model using international trade data, which are measured independently from sectoral value added and employment data. Quantitatively, the model predicts that relatively faster physical productivity growth in the non-agricultural sector has, in many countries, offset the movement of labor out of agriculture, leading to persistently lower value added per worker in agriculture. Consistent with the model's predictions, previous exports by sector are strong predictors of agricultural productivity gaps in the current cross-section of countries.