Central Data Catalog

Citation Information

Type Working Paper - CESifo Working Paper
Title Wages, human capital, and structural transformation
Author(s)
Issue 6426
Publication (Day/Month/Year) 2017
URL https://www.econstor.eu/bitstream/10419/161865/1/cesifo1_wp6426.pdf
Abstract
Average wages are considerably lower in agriculture than in the other sectors. We document this
fact for thirteen countries ranging from rich (Canada, U.S.) to poor (India, Indonesia). We
develop a measure of human capital that accounts for the selection of workers with different
unobserved skills into sectors. We find that differences in human capital account for most of the
wage gaps. We develop a model that rationalizes this finding and that allows us to quantify the
distortions to the allocation of labor. We find that they are considerably smaller than typically
claimed in the literature.

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