According to national accounts data for developing countries, value added per worker is on average four times higher in the non-agriculture sector than in agriculture. Taken at face value this “agricultural productivity gap” suggests that labour is greatly misallocated across sectors in the developing world, and that policy makers should take steps to encourage workers to shift out of agricultural production and into the non-agricultural activities. This project assesses to what extent the gap is still present when better measures of inputs and outputs are taken into consideration, and finds that even after considering sector differences in hours worked and human capital per worker, it still appears that workers in the non-agricultural sector earn far higher wages than agricultural workers.
Gollin, D.; Lagakos, D.; Waugh, M. The Agricultural Productivity Gap in Developing Countries (Policy Brief). (2011) 2 pp.