Economic Growth and Development by Sibabrata Das Alex Mourmouras & Peter C. Rangazas

Author:Sibabrata Das, Alex Mourmouras & Peter C. Rangazas
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

5.4 Missing Labor Markets in the Traditional Sector*

Chapter 6 documents that in the historical development of Europe and the USA, most of the measured annual wage gap between agriculture and nonagriculture was due to lower annual hours worked in agriculture rather than lower productivity per hour worked. In many developing countries today, differences in hours worked explain a significant portion of the annual gaps in worker productivity (Gollin et al. 2014; Vollrath 2013). In Chap. 6, we show how one can adjust the analysis of this Chapter to reinterpret the wage gap as a gap in hours worked. Our approach is to think of hours worked in the traditional sector as being constrained by the seasonality and the physical demands of traditional agriculture, and by the time spent securing property rights. Similar to Sect. 5.3, the loss in hours worked in the traditional sector is compensated in equilibrium by rents from inherited land and from a larger family.

Vollrath (2009b) takes a different approach and explains the shortfall in agricultural hours as a choice made by traditional farmers to work less than workers in the modern sector. This section follows Vollrath’s lead and allows for an endogenous choice of work effort. An important assumption, needed to generate lower work effort as a choice of farmers, is the absence of labor markets in the traditional sector. We begin with a simple case where work effort is the only choice variable and then extend the analysis to include fertility and schooling.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.