urbanization and poverty reduction the role of rural diversification and secondary towns a rather unique panel tracking more than 3 300 individuals from households in rural kagera tanzania during 1991 4 2010 shows that about one in two individuals households who exited poverty did so by transitioning from agriculture into the rural nonfarm economy or secondary towns only one in seven exited poverty by migrating to a large city although those moving to a city experienced on average faster consumption growth further analysis of a much larger cross country panel of 51 developing countries cannot reject that rural diversification and secondary town development lead to more inclusive growth patterns than metropolitization indications are that this follows because more of the poor find their way to the rural nonfarm economy and secondary towns than to distant cities the development discourse would benefit from shifting beyond the rural urban dichotomy and focusing instead more on how best to urbanize and develop the rural nonfarm economy and secondary towns

fertilizing growth agricultural inputs and their effects in economic development this paper estimates the role of agronomic inputs in cereal yield improvements and the consequences for countries processes of structural change the results suggest a clear role for fertilizer modern seeds and water in boosting yields we then test for respective empirical links between agricultural yields and economic growth labor share in agriculture and non agricultural value added per worker the identification strategy includes a novel instrumental variable that exploits the unique economic geography of fertilizer production and transport costs to countries agricultural heartlands we estimate that a half ton increase in staple yields generates a 14 to 19 percent higher gdp per capita and a 4 6 to 5 6 percentage point lower labor share in agriculture five years later the results suggest a strong role for agricultural productivity as a driver of structural change

structural change in an open economy we study the importance of international trade in structural change our framework has both productivity and trade cost shocks and allows for non unitary income and substitution elasticities we calibrate our model to investigate south korea s structural change between 1971 and 2005 we nd that the shock processes propagated through the model s two main transmission mechanisms non homothetic preferences and the open economy explain virtually all of the evolution of agriculture and services labor shares and the rising part of the hump shape in manufacturing counterfactual exercises show that the role of the open economy is quantitatively important for explaining south korea s structural change

the drivers of structural change the main goal of this paper is to provide an integrated survey of the literature devoted to identifying the drivers of structural change broadly defined as the process of reallocation of economic activity across the three broad sectors agriculture manufacturing and services using the ggdc 10 sector database this paper first presents the empirical facts associated with structural change in different regions of the world that is europe and the usa asia latin america and africa then reviews four determinants of structural change i changes in income ii changes in relative sectoral prices iii changes in input output linkages and iv changes in comparative advantage s via globalization and trade

agricultural productivity and structural transformation evidence from brazil we study the eects of the adoption of new agricultural technologies on structural transfor mation to guide empirical work we present a simple model where the eect of agricultural productivity on industrial development depends on the factor bias of technical change we test the predictions of the model by studying the introduction of genetically engineered soybean seeds in brazil which had heterogeneous eects on agricultural productivity across areas with dierent soil and weather characteristics we nd that technical change in soy production was strongly labor saving and lead to industrial growth as predicted by the model

industrialisation catching up and economic growth a comparative study across the world s capitalist economies various hypotheses are examined seeking to explain inter country convergence at the upper end but divergence at the lower end of the world income rankings a model of disequilibrium growth with sector specific technological progress and spillover is developed and then estimated on two samples of capitalist economies 1960 85 it is found that the degree of disequilibrium between agriculture and industry is greatest in the least developed economies but their rate of labor transfer has been slow technological spillover has stimulated productivity growth in less developed agricultural sectors but not in the industrial sectors of the least developed economies copyright 1991 by royal economic society

rural infrastructure transactions costs and market participation in kenya abstract we develop a conceptual framework for quantifying fixed transactions costs facing semisubsistence households using household survey data from a sample of 324 kenyan maize farmers we jointly estimate household supply and demand schedules and transactions costs econometric results indicate that on average the ad valorem tax equivalent of fixed transactions costs for households in our sample is 15 additional analysis indicates that economic isolation is positively associated with the size of transactions costs to the best of our knowledge ours are the first empirical estimates of the magnitude of fixed transactions costs for agricultural households in developing countries

agricultural productivity and the sectoral reallocation of labor in rural india abstract how do shocks to agricultural productivity affect the allocation of labor across sectors of the economy to answer this i use data from rural india to show that exogenous increases in agricultural productivity caused by abnormally high levels of precipitation lead to an increase in the labor share of the non agricultural sector i further show that the non tradable sector expands significantly when agricultural output increases this evidence is consistent with increasing agricultural output causing increased demand for local non tradables which in turn increases the non agricultural labor share

agricultural distortions structural change and economic growth a cross country analysis taxing agriculture to mobilize resources for industrialization has been a widely used development strategy using novel cross country time series data sets with direct measures of agricultural taxation we examine how a policy bias against agriculture affects the speed of convergence in income per capita structural change and economic growth we find that distortionary agricultural policies in poor economies can account for the emergence of convergence clubs in our sample by significantly retarding their structural transformation and economic growth overall we find no evidence suggesting that policies that discriminate against agriculture have been beneficial for long term economic growth

transportation costs agricultural productivity and cross country income differences i document large difierences in domestic transport costs and transportation infrastructure across nations the richest countries have 5 times lower transport costs and 32 times more infrastructure per capita than the poorest countries of the world are these difierences a source of aggregate labor productivity difierences across nations using a three sector two region general equilibrium model i show that high transport costs can distort the allocation of resources not only across geographically dispersed production units within sectors but also between agriculture and non agriculture taking as given the observed difierences in transportation costs and transportation infrastructure per capita i quantify the role of transportation for cross country income difierences the calibrated model produces an income disparity of 7 5 between the 5 rich and 5 poor countries this corresponds to an improvement of 50 relative to the disparity predicted by a two sector model of agriculture and non agriculture furthermore the efiects of advancements in transportation are non linear the elasticity of aggregate labor productivity with respect to transport labor productivity in the poorest nations is 6 times higher than in the richest ones the efiects of transport frictions are even more pronounced when restrictions to regional migration are introduced

the role of trade in structural transformation abstract low agriculture productivity is considered a key obstacle to economic development for many countries international trade in agricultural goods can help overcome this barrier and facilitate structural transformation because it allows countries to import part of their food needs this article quantifies the role of trade in this context through the examples of south korea during the last 50 years and great britain in the 19th century to do the analysis i calibrate and simulate a two sector neoclassical growth model to match the data and perform the policy experiments i find that agricultural imports played a crucial role in the early transformation of great britain while in south korea trade also had a positive impact on its structural transformation but it could have played a much larger role if the country had not introduced agricultural protection policies

industrial output fluctuations in developing countries general equilibrium consequences of agricultural productivity shocks abstract this paper shows that a negative shock to agricultural productivity may increase food prices and labor and capital can move away from manufacturing into agriculture to meet the subsistence requirement for food this effect depends on income levels and openness to trade using annual manufacturing data and rainfall shocks as the instrument for crop yields proxy for agricultural productivity i find that an exogenous decline in yield decreases manufacturing output as well as employment and capital investment in manufacturing overall crop yield variation can explain up to 44 of industrial output fluctuations in developing countries rainfall shocks cause 31 of the fluctuations lastly this paper shows that such perverse phenomena in which resources move toward the sector with declining productivity can lead to a significant reduction in aggregate productivity

how important are dual economy effects for aggregate productivity this paper brings together development accounting techniques and the dual economy model to address the role that factor markets have in creating variation in aggregate total factor productivity tfp development accounting research has shown that much of the variation in income across countries can be attributed to differences in tfp the dual economy model suggests that aggregate productivity is depressed by having too many factors allocated to low productivity work in agriculture data show large differences in marginal products of similar factors within many developing countries offering prima facie evidence of this misallocation using a simple two sector decomposition of the economy this article estimates the role of these misallocations in accounting for the cross country income distribution a key contribution is the ability to bring sector specific data on human and physical capital stocks to the analysis variation across countries in the degree of misallocation is shown to account for 30 40 of the variation in income per capita and up to 80 of the variation in aggregate tfp

inequality the urban rural gap and migration using population and product consumption data from the demographic and health surveys i construct comparable measures of inequality and migration for 65 countries including some of the poorest countries in the world i find that the urban rural gap accounts for 40 of mean country inequality and much of its cross country variation one out of every four or five individuals raised in rural areas moves to urban areas as a young adult where they earn much higher incomes than nonmigrant rural permanent residents equally one out of every four or five individuals raised in urban areas moves to rural areas as a young adult where they earn much lower incomes than their nonmigrant urban cousins these flows and relative incomes are suggestive of a world where the population sorts itself geographically on the basis of its human capital and skill i show that a simple model of this sort explains the urban rural gap in living standards

on measuring the benefits of lower transport costs despite large amounts invested in rural roads in developing countries little is known about their benefits this paper derives an expression for the willingness to pay for a reduction in transport costs from the canonical agricultural household model and uses it to estimate the benefits of a hypothetical road project estimation is based on novel cross sectional data collected in a small region of madagascar with enormous yet plausibly exogenous variation in transport cost a road that essentially eliminated transport costs in the study area would boost the incomes of the remotest households those facing transport costs of about usd 75 ton by nearly half mostly by raising non farm earnings this benefit estimate is contrasted to one based on a hedonic approach

the food problem and the evolution of international income levels in most poor countries large fractions of land labor and other productive resources are devoted to producing food for subsistence needs we show that a model incorporating the food problem can provide new and useful insights into the evolution of international income levels in particular we find that the food problem can explain why some countries started to realize increases in per capita output more than 250 years later in history than others we also show that the food problem has important implications for growth miracles and the speed at which a country converges to its balanced growth path

does the organization of capital matter employers and active labor market policy at the national and firm levels does the organization of business matter for social policy development in the advanced capitalist democracies conventional welfare state analysis has given this significant question scant attention we argue however that the representational power of business coordination across business interest units and integration of associations in corporatist policy making forums or what we call the social corporatist organization of business should result in greater support and participation by employers in social policy formation and implementation we test our arguments with models both of 1980 98 pooled time series data on withinand across country variation in spending on active labor market programs and of extensive firm level survey data from denmark and the united kingdom we find that the centralization and coordination of employers as well as the integration of employer organizations in corporatist policy making forums are strongly associated with shares of national income devoted to active labor market policy we find moreover that the degree of employer organization conditions active labor market policy responses to de industrialization and increases in general unemployment at the firm level membership in an employer association has a significant positive effect on employer participation in active labor market programs in corporatist denmark but not in the pluralist united kingdom

making and breaking social capital the impact of welfare state institutions since the debate about the importance of social capital and civil society for the quality of democracy began scandinavia has caused problems observers have been bewildered by an allegedly paradoxical coexistence of a wealth of social capital and extensive welfare state arrangements some theorize that large welfare states make engagement in voluntary associations unnecessary making the production of social capital more difficult however empirical research shows scandinavia to have comparatively high levels of social capital to solve this paradox the authors address how the causal mechanism between variation in the design of welfare state institutions and social capital works the empirical analysis based on swedish survey data suggests that the specific design of welfare state policies matters for the production of social capital contacts with universal welfare state institutions tend to increase social trust whereas experiences with needs testing social programs undermine it the policy implic

can cities or towns drive african development economy wide analysis for ethiopia and uganda rapid urbanization is an important characteristic of african development and yet the structural transformation debate focuses on agriculture s relative merits without also considering the benefits from urban agglomeration as a result african governments are often provided conflicting recommendations on the importance of rural agriculture or urban industry we develop dynamic economy wide models for ethiopia and uganda that capture both traditional aspects of the debate growth linkages and foreign trade and benefits from urbanization internal migration and agglomeration effects simulations suggest that urban agglomeration is an important source of long term growth and structural transformation but that investing in cities does not greatly reduce national poverty over the short term in this regard agricultural growth is more effective albeit with slower national growth given these trade offs we conclude that

toward an understanding of economic growth in africa a reinterpretation of the lewis model summary we develop a model economy that has many of the features of lewis 1954 but that also includes an in between sector as described by lewis 1979 our model underscores the importance of the following determinants of structural change i productivity growth in the agricultural sector ii productivity growth in the nonagricultural sector and iii the terms of trade public investment enhances productivity growth in all sectors but when it is financed by foreign inflows it also causes a real exchange rate appreciation leading to a contraction in the open modern sector these results provide a partial explanation for recent patterns of growth in rwanda and elsewhere in africa where the nontradables or what we call the in between sector has expanded more rapidly than the tradable sector our results also highlight the dilemma faced by poor countries in dire need of public investment with a very limited tax base

economic growth and sector dynamics abstract this paper analyzes the endogenous determination of sectors in a growing economy it assumes that there are traditional sectors and modern sectors and economic growth is driven by rising productivity of the modern sectors it also assumes that individuals are heterogeneous which leads to increasing marginal opportunity costs in creating new modern sectors we show that under these main assumptions economic growth first increases diversification to sectors and then reduces it we also show that for the equilibrium to be stable and well behaved it is required that the modern and traditional sectors should be substitutes and not complements

structural change and economic growth this paper presents a model in which a country s measured average propensity to save endogenously rises when its economy industrializes the model has agricultural and manufacturing sectors only agriculture uses land if at early dates income per capita is low agricultural consumption is important land is valuable and capital gains on land may constitute most wealth accumulation leaving the country s nipa aps low if exogenous technological progress raises incomes over time engel s law shifts demand to manufactured goods then land s portfolio importance relative to reproducible capital diminishes and the national income and products account saving rate can rise this paper presents a model illustrating that structural change due to the operation of engel s law can systematically affect an economy s measured saving rate according to the model a country s national income and product account average propensity to save will rise naturally if and when technological progress sufficiently lifts its income per capita this suggests a new interpretation of time series evidence while saving rates historically tend to be higher after industrialization than before one cannot automatically infer that changing wealth accumulation behaviour led to modernization rather structural change accompanying growth may have caused the rise in saving rates this paper also warns that international trade could lead to a contrasting pattern in cross sectional data highincome nations might contemporaneously have lower measured saving rates than poor countries recent work by mankiw romer and weil 1992 islam 1995 mankiw 1995 and others investigates long run patterns the analyses assume that each economy has attained or is moving toward a steady state equilibrium as in solow 1956 a country s steady state level of per capita gdp depends on its average propensity to save aps its rate of population growth the efficiency of its production sector etc regression outcomes seem consistent with the solow model s prediction that a higher aps will ceteris paribus lead to a higher level of income per capita the idea is that heterogeneity of exogenous preferences leads to international differences in aps s and in turn to long run differences

aid and the supply side public investment export performance and dutch disease in low income countries contemporary policy debates on the macroeconomics of aid often concentrate on short run dutch disease effects ignoring the possible supply side impact of aid financed public expenditure in the simple model of aid and public expenditure presented here public infrastructure generates an inter temporal productivity spillover which may exhibit a sector specific bias the model also provides for a learning by doing externality through which total factor productivity in the tradable sector is an increasing function of past export volumes an extended computable version of this model is used to simulate the effect of a step increase in net aid flows the simulations show that beyond the short run when conventional demand side dutch disease effects are present the relationship between enhanced aid flows and real exchange rates output growth and welfare is less straightforward than simple models of aid suggest public infrastructure investment that generates a productivity bias in favor of non tradable production delivers the largest aggregate return to aid but at the cost of deterioration in the income distribution income gains accrue predominantly to skilled and unskilled urban households leaving the rural poor relatively worse off under plausible parameterizations of the model the rural poor may also be worse off in absolute terms

conformism and structural change using a simple multisector model of endogenous growth we show that commodity specific consumption externalities can be a source of structural change when the degrees of consumption externalities are different between goods each sector grows at a different rate however the aggregate economy exhibits balanced growth in that capital stock and expenditure grow at the same constant rate a three sector version of our model may reconcile kaldor s stylized facts with empirically plausible profiles of industrial structure transformation

rural urban interdependence structural change and development abstract this paper presents a model of development that explicitly incorporates the interaction between rural agriculture and urban non agriculture explored by murata 2002 the increase of capital stock leads to capital intensive agriculture and the reallocation of labor from agriculture to non agriculture people who migrate to urban areas create new intermediate goods and enhance non agricultural productivity which in turn causes capital accumulation and capital intensive agriculture this mechanism causes a poverty trap stagnation and unbounded growth

the role of the structural transformation in aggregate productivity we investigate the role of sectoral differences in labor productivity in explaining the process of structural transformation the secular reallocation of labor across sectors and the time path of aggregate productivity across countries using a simple model of the structural transformation that is calibrated to the growth experience of the united states we measure sectoral labor productivity differences across countries productivity differences between rich and poor countries are large in agriculture and services and smaller in manufacturing moreover over time productivity gaps have been substantially reduced in agriculture and industry but not nearly as much in services in the model these sectoral productivity patterns generate implications that are broadly consistent with the cross country evidence on the structural transformation aggregate productivity paths and relative prices we show that productivity catch up in industry explains about 50 percent of the gains in aggregate productivity across countries while low relative productivity in services and the lack of catch up explains all the experiences of slowdown stagnation and decline observed across countries

life cycle individual thrift and the wealth of nations this paper provides a review of the theory of the determinants of individual and national thrift that has come to be known as the life cycle hypothesis lch of saving applications to some current policy issues are also discussed part i deals with the state of the art on the eve of the formulation of the lch some 30 years ago part ii sets forth the theoretical foundations of the model in its original formulation and later amendment calling attention to various implications distinctive to it and sometimes counter intuitive it also includes a review of a number of crucial empirical tests both at the individual and the aggregate level part iii reviews some applications of lch to current policy issues though only in sketchy fashion as space constraints prevent fuller discussion this abstract was borrowed from another version of this item

the role of transportation in u s economic development 1840 1860 we return to two questions concerning the 19th century u s transportation revolution first to what extent were transportation improvements responsible for the large changes in the regional distribution of population in the united states and within regions for the changes in industry structure second how important were transportation improvements for welfare gains we find that transport improvements were the key factor driving where people lived and what industry they worked in we also find that transport improvements were important for welfare gains gains over 1840 1860 would have been only half as large if there had been no transportation improvements

economic growth size of the agricultural sector and urbanization in africa this paper uses variations in international commodity prices and rainfall to construct instrumental variables estimates of the within country effect that changes in the size of the agricultural sector and gdp per capita growth have on the urbanization rate for a panel of 41 african countries during the period 1960 2007 the paper s three main findings are that i decreases in the share of agricultural value added lead to a significant increase in the urbanization rate ii conditional on changes in the share of agricultural value added gdp per capita growth does not significantly affect the urbanization rate iii increases in the urbanization rate had a significant negative average effect on gdp per capita growth

the depressing effect of agricultural institutions on the prewar japanese economy why didn t the japanese miracle take place before world war ii the culprit we identify is a barrier that kept prewar agricultural employment constant using a standard neoclassical two sector growth model we show that the barrier induced sectoral distortion and an ensuring lack of capital accumulation account well for the depressed output level without the barrier japan s prewar gnp per worker would have been at least about a half of that of the united states not about a third as in the data the labor barrier existed because we argue the prewar patriarchy forced the son designated as heir to stay in agriculture

structural transformation and comparative advantage implications for small open economies data from the last half century show that revealed comparative advantage in agriculture manufacturing is negatively positively associated with the rate of decline in labour share in agriculture motivated by this finding the author constructs and calibrates a simple open economy model where there is learning by doing in manufacturing and industry supplied inputs to agricultural production this paper focuses on the effects of comparative advantage and learning by doing on structural transformation and calibrate the model to the us and the uk data to estimate key parameters of the model quantitative experiments show that holding constant other factors a small difference in a country s comparative advantage can account for a large variation in structural transformation for open economies which does not require nearly as much differential productivity growth as in closed economy models

growth sectoral composition and the evolution of income levels abstract we assert that the endowments of production factors cause cross country differences in gdp by generating disparities in the sectoral composition we characterize the dynamic equilibrium of a two sector endogenous growth model with several consumption goods that are subject to minimum consumption requirements in this model economies with the same fundamentals but different endowments of capitals will end up growing at a common rate although the long run sectoral composition of gdp will be different because the total factor productivity tfp in multisector models depends on sectoral structure these differences in capital endowments will also generate sustained differences in tfps

endowment structures industrial dynamics and economic growth this paper develops a dynamic general equilibrium model to explore industrial evolution and economic growth in a closed developing economy the authors show that industries will endogenously upgrade toward the more capital intensive ones as the capital endowment becomes more abundant the model features a continuous inverse v shaped pattern of industrial evolution driven by capital accumulation as the capital endowment reaches a certain threshold a new industry appears prospers then declines and finally disappears while the industry is declining a more capital intensive industry appears and booms ad infinitum explicit solutions are obtained to fully characterize the whole dynamics of perpetual structural change and economic growth implications for industrial policies are discussed

structural change and the kaldor facts in a growth model with relative price effects and non gorman preferences u s data reveal three facts 1 the share of goods in total expenditure declines at a constant rate over time 2 the price of goods relative to services declines at a constant rate over time and 3 poor households spend a larger fraction of their budget on goods than do rich households i provide a macroeconomic model with non gorman preferences that rationalizes these facts along with the aggregate kaldor facts the model is parsimonious and admits an analytical solution its functional form allows a decomposition of u s structural change into an income and substitution effect estimates from micro data show each of these effects to be of roughly equal importance

productivity transport costs and subsistence agriculture abstract a defining feature of many poor economies is the large fraction of workers engaged in subsistence agriculture we develop a multi sector multi region model of a poor economy in which it is costly to transport goods across regions in order to study this outcome a key finding is that higher transport costs drive up the size of the agricultural workforce and the fraction in subsistence in a calibrated version of our model we show that the effect of transport productivity is quantitatively important in terms of both allocations and welfare

relative prices and sectoral productivity the relative price of services rises with development a standard interpretation of this fact is that productivity differences across countries are larger in manufacturing than in services the service sector comprises heterogeneous categories we document that many disaggregated service categories such as transportation communication and finance feature a negative income elasticity of relative prices whereas the relative price of aggregate services is mostly driven by large expenditure categories in housing collective government and health that feature a positive income elasticity of relative prices we also document a substantial reallocation of expenditures in services from categories with positive income elasticities traditional services to categories with negative elasticities non traditional services as income rises using an otherwise standard multi sector development accounting framework extended to include an input output structure we find that the cross country income elasticity of sectoral productivity is large in non traditional services 1 15 smaller in manufacturing 1 05 and much smaller in traditional services 0 67 eliminating cross country productivity differences in non traditional services reduces aggregate income disparity by 58 percent a 7 9 fold reduction in aggregate productivity differences we also find that the heterogeneity between traditional and non traditional services has a substantial impact on aggregate productivity and that the input output structure is important in this assessment

trust in large organizations several authors suggest that trust is an important determinant of cooperation between strangers in a society and therefore of performance of social institutions we argue that trust should be particularly important for the performance of large organizations in a cross section of countries evidence on government performance participation in civic and professional societies importance of large firms and the performance of social institutions more generally supports this hypothesis moreover trust is lower in countries with dominant hierarchical religions which may have deterred networks of cooperation trust hold up remarkably well on a cross section of countries this abstract was borrowed from another version of this item

structural change in a multisector model of growth we study a multi sector model of growth with differences in tfp growth rates across sectors and derive sufficient conditions for the coexistence of structural change characterized by sectoral labour reallocation and constant aggregate growth path the conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists we present evidence from us two digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services we show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model

rural urban linkages public investment and transport costs the case of tanzania summary the economy of tanzania like those of many other sub saharan african countries displays strong geographic and locational disparities we develop a three location spatial applied general equilibrium model calibrated to the 2001 tanzanian social accounting matrix to examine the impact of various public investment programs on household welfare across this diverse geography in which production and consumption are locationally specific and transport costs support equilibrium price differences across locations we examine how different public investment packages combined with reforms in the transport sector alter the equilibrium structure and location of economic activity the choice of financing arrangement matters for welfare since tax incidence relative price and real exchange rate movements are non neutral we show that the distributional consequences of alternative investment programs may matter more in terms of household welfare than the direct consequences of targeting investment to particular sectors or locations for instance under some financing scenarios interventions that aid agriculture may lead to decreases in the welfare of the rural unskilled labor force because the financing mechanisms create distortions that effectively skew the terms of trade sufficiently powerfully against the rural unskilled as to outweigh the direct welfare enhancing effects of the public investment we also note that welfare gains are generated by the movement of rural workers out of quasi subsistence agriculture into higher productivity jobs in other sectors and locations

used clothing donations and apparel production in africa this article examines the importance of one possible explanation for the failure of african countries to step onto the bottom rung of the manufacturing sophistication ladder that is to produce apparel used clothing donations to thrift shops and other organisations in industrialised countries typically end up being sold to consumers in africa since used clothing is initially provided as a donation it shares characteristics with food aid which always assists consumers but at times harms african food producers used clothing imports are found to have a negative impact on apparel production in africa explaining roughly 40 of the decline in production and 50 of the decline in employment over the period 1981 2000

how productive is infrastructure a new approach and evidence from rural india there have been competing arguments about the effect of public infrastructure on productivity level based and debate based regressions often lead to different estimates to help reconcile this difference this article applies the gmm method to first test for causality to check for length of lagged relationships and the existence of reverse causality before specifying a final model and deciding the estimation procedure this approach is illustrated using a panel data set for india the results show that infrastructure development in india is productive providing supporting evidence to reverse the trend of declining investment in rural infrastructure

isolation and agricultural productivity this article examines the mechanisms that transmit isolation into productivity in particular we study the effect of isolation and transport infrastructure on welfare and agricultural productivity in the case of madagascar madagascar is a good case study given the bad shape of its infrastructure and therefore the significant variation in isolation based on comprehensive household survey data combined with a census of communes we discover a strong poverty isolation relationship further we find the inverse relationship between agricultural productivity and isolation to be surprisingly strong we isolate the following reasons why productivity might decline with isolation i transportation induced transaction costs ii the inverse relationship between plot size and productivity iii increasing price variability and extensification onto less fertile land and iv insecurity

inequality social insurance and redistribution is the political support for welfare policy higher or lower in less egalitarian societies we answer the question using a model of welfare policy as publicly financed insurance that pays benefits in a redistributive manner when voters have both redistributive and insurance motives for supporting welfare spending the effect of inequality depends on how benefits are targeted greater inequality increases support for welfare expenditures when benefits are targeted to the employed but decreases support when benefits are targeted to those without earnings with endogenous targeting support for benefits to those without earnings declines as inequality increases whereas support for aggregate spending is a v shaped function of inequality statistical analysis of welfare expenditures in advanced industrial societies provides support for key empirical implications of the model

are agricultural markets more developed around cities testing for urban heterogeneity in separability in tanzania abstract a key question for policymakers concerned about feeding sub saharan africa s ssa rapidly growing cities is whether or not nearby farms benefit from improved agricultural markets evidence from case studies and agricultural location theory suggest so but urban heterogeneity has not yet been found in a common economic test of functioning agricultural markets the separability result the test is based on a key insight of the agricultural household model which finds that a farm s profit should be maximized independently from household utility given perfect factor markets i e separability but not so if the household faces at least two market failures i e non separability in this paper i test for geographic heterogeneity in separability between rural peri urban and urban districts using 2014 15 data from the world bank s living standards measurement study and integrated surveys on agriculture lsms isa from tanzania i find strong evidence that the correlation between pre harvest labor demand and household size implying non separability in rural areas is significantly weaker in three of tanzania s five largest cities dar es salaam arusha and mbeya given certain assumptions this can be interpreted as evidence of increased agricultural market functionality around these cities relative to rural areas overall these results contribute to the debate on how to achieve urban food security in ssa and give some validity to agricultural location theory and the separability test as tools to help policymakers characterize the nature of agricultural factor markets

the long reach of cotton in the us south tenant farming mechanization and low skill manufacturing abstract this paper examines the long run impact of cotton agriculture on local development in the us south focusing on a novel aspect of structural change exploiting climate based variation in cotton production i show that cotton specialization in the late 19th century had a negative impact on local development that lasts through 2010 this negative relationship however only became evident in the second half of the 20th century i argue that the change was caused by the mechanization of cotton production which began in the 1950s after the mechanization local manufacturing absorbed displaced cotton tenants with low human capital in response to the inflow of cotton tenants labor productivity in manufacturing began to decline and the effects persisted in the long run the persistent decline in manufacturing productivity is explained by directed technical change that reduced demand for skills in manufacturing these results indicate that depending on the agricultural background structural change can negatively affect the evolution of technology and productivity in the industrial sector

a quantitative analysis of china s structural transformation abstract the structural transformation of china or the reallocation of resources from the agricultural sector to the nonagricultural sector between 1978 and 2003 was truly remarkable we develop a two sector neoclassical growth model to quantitatively assess the driving forces of china s recent structural transformation in addition to the forces currently emphasized in the literature sectoral productivity growth we show that china s transformation was accelerated significantly by the gradual reduction in the relative size of the chinese government we find that the reduction in the size of the chinese government accounted by itself for 15 of the reduction in the agricultural share of employment two mechanisms explain this i in our model the lower tax rate associated with reduced intervention encouraged the accumulation of physical capital which is produced in the nonagricultural sector ii lower inefficiencies induced incomes to rise and given our preferences resulted in a disproportionate increase in the demand for the nonagricultural good

changes in sectoral composition associated with economic growth in this paper the author uses dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth she shows that growth is affected by sectoral composition and vice versa the model is basically a solow model of sustained growth with multiple consumption goods and nonhomothetic preferences each consumption good is produced using different factor intensities the rate of exogenous technological change is different in each sector nonhomotheticity of preferences drives the result that sectoral composition affects growth rates copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the extent of the market and stages of agricultural specialization this paper provides empirical evidence of nonlinearity in the relationship between crop specialization in a village economy and the extent of the market size of the urban market relevant for the village the results suggest that the portfolio of crops in a village economy becomes more diversified initially as the extent of the market increases however after the market size reaches a threshold the production structure becomes specialized again this evidence on the stages of agricultural diversification is consistent with the stages of diversification identified in the recent literature for the economy as a whole and also for the manufacturing sector the evidence highlights the importance of improving farmers access to markets through investment in transport infrastructure and removal of barriers to trading

wealth and inequality over eight centuries of british capitalism abstract this paper constructs annual data for the wealth income ratio w y for the uk over the period 1210 2013 it is found that the w y ratio has fluctuated at one two century frequencies about a constant level of approximately 500 over the past eight centuries furthermore a u shaped w y path is identified over the past two centuries and it is argued that the descending part of the u shape is driven by the transition from pre industrial modes of production to industrialization and that the post 1980 upturn in the w y ratio represents the transition from the industrial to the post industrialization era

migration and economic mobility in tanzania evidence from a tracking survey this study explores the extent to which migration has contributed to improved living standards of individuals in tanzania using longitudinal data on individuals the authors estimate the impact of migration on consumption growth between 1991 and 2004 the analysis addresses concerns about heterogeneity and unobservable factors correlated with both income changes and the decision to migrate the findings show that migration adds 36 percentage points to consumption growth during a period of considerable growth in consumption these results are robust to numerous tests and alternative specifications unpacking the findings the analysis finds that moving out of agriculture is correlated with much higher growth than staying in agriculture although growth is always higher in any sector if one physically moves economic mobility is strongly linked to geographic mobility the puzzle is why more people do not move if returns to geographic mobility are high the evidence is consistent with models in which exit barriers are set by home communities through social and family norms that prevent migration of certain categories of people

the environmental kuznets curve and the structural change hypothesis we provide a very simple macroeconomic investigation of the role that structural changes might play in generating inverted u shaped income pollution relationships differently from previous research which mainly focuses on empirical static or general equilibrium models we develop a standard balanced growth path bgp analysis we show that along the bgp equilibrium an inverted u shaped income pollution relationship may occur as a response to structural changes but whether this is the case or not it will crucially depend upon the magnitude of a production externality parameter moreover we show that the negative relationship between income and pollution can only be a transitory phenomenon and in the long run pollution will increase as income rises generating overall an n shaped pattern

welfare states and social trust this article tests the linkage between institutional configuration and social trust highlighting the role of the welfare states in coordinating interests among different labor market actors this study initially builds a theoretical framework distinguishing training supplemented welfare regimes from transfer based welfare regimes evidence from descriptive and multivariate analyses of world values survey based on 17 advanced industrial democracies supports my argument that public investment in skill provision prevalent in training supplemented welfare states leads to higher accumulation of social trust whereas passive social transfers result in lower social trust especially high investment in public skill provision leads to a decreased gap in social trust between employers and low skilled workers as well as among different occupational groups in addition the negative effect of passive social transfers on trust is greatly ameliorated when it is jointly configured with high active labor market polici

the u s demographic transition between 1800 and 1940 the u s went through a dramatic demographic transition in 1800 the average woman had 7 children and 94 percent of the population lived in rural areas by 1940 the average woman birthed just 2 kids and only 43 percent of populace lived in the country the question is what accounted for this shift in the demographic landscape the answer given here is that technological progress in agriculture and manufacturing explains these facts

a model of growth and migration this paper contains a model with which the desirability of persistent urbanization can be examined there are two regions city and countryside joint restrictions on the technologies in each region and on preferences over the goods produced in each region are the driving force of migration in equilibrium there is persistent migration from the countryside to the city even though there are externalities in production the competitive equilibrium is pareto optimal summary in fre excerpt

the paradox of redistribution and strategies of equality welfare state institutions inequality and poverty in the western countries the structure of welfare state institutions 2 a trade off exists between the degree of low income targeting and the size of redistributive budgets 3 outcomes of market based distribution are often more unequal than those of earnings related social insurance programs we argue that social insurance institutions are of central importance for redistributive outcomes using new data our comparative analyses of the effects of different institutional types of welfare states on poverty and inequality indicate that institutional differences lead to unexpected outcomes and generate the paradox of redistribution the more we target benefits at the poor and the more concerned we are with creating equality via equal public transfers to all the less likely we are to reduce poverty and inequality social scientists and social reformers have long debated how the welfare state and social policies should be designed so as to best reduce poverty and inequality this debate involves two different issues one question concerns whether social policies should be targeted or universal that is should they be organized for the poor only or should the welfare state include all citizens in the context of nontargeted programs another question concerns the level of benefits should benefits be equal for all or should they be related to previous earnings and in

de agriculturalization as a result of productivity growth in agriculture abstract this paper explores the secular decline in the employment share in agriculture as a result of productivity growth in the agricultural sector i study an equation that states that employment share in agriculture is determined by the subsistence constraint and productivity in agriculture given the calibrated value for subsistence level of consumption in agriculture labor productivity in this sector implies a share of employment in agriculture in the model that turns out to be very close to the data for a variety of countries between 1963 and 2005

agricultural productivity hired labor wages and poverty evidence from bangladesh this paper provides evidence on the effects of agricultural productivity on wage rates labor supply to market oriented activities and labor allocation between own farming and wage labor in agriculture to guide the empirical work this paper develops a general equilibrium model that underscores the role of reallocation of family labor engaged in the production of non marketed services at home home production the model predicts positive effects of a favorable agricultural productivity shock on wages and income but the effect on hired labor is ambiguous it depends on the strength of reallocation of labor from home to market production by labor surplus and deficit households taking rainfall variations as a measure of shock to agricultural productivity and using subdistrict level panel data from bangladesh this paper finds significant positive effects of a favorable rainfall shock on agricultural wages labor supply to market work and per capita household expenditure the share of hired labor in contrast declines substantially in response to a favorable productivity shock which is consistent with a case where labor deficit households respond more than the labor surplus ones in reallocating labor from home production

malthus to solow a unified growth theory is developed that accounts for the roughly constant living standards displayed by world economies prior to 1800 as well as the growing living standards exhibited by modern industrial economies our theory also explains the industrial revolution which is the transition from an era when per capita incomes are stagnant to one with sustained growth the authors use a standard growth model with several technologies the first denoted the malthus technology requires land labor and reproducible capital as inputs the second denoted the solow technology does not require land the authors show that in the early stages of development only the malthus technology is used and due to population growth living standards are stagnant despite technological progress eventually technological progress causes the solow technology to become profitable and both technologies are employed at this point living standards improve since population growth has less influence on per capita income growth in the limit the economy behaves like a standard solow growth model excerpt

modernization of agriculture and long term growth abstract this paper develops a two sector model that illuminates the role played by agricultural modernization in the transition from stagnation to growth when agriculture relies on traditional technology industrial development reduces the relative price of industrial products but has a limited effect on per capita income because most labor has to remain in farming growth is not sustainable until this relative price drops below a certain threshold thus inducing farmers to adopt modern technology that employs industry supplied inputs once agricultural modernization begins per capita income emerges from stasis and accelerates toward modern growth our calibrated model is largely consistent with the set of historical data we have compiled on the english economy accounting well for the growth experience of england encompassing the industrial revolution