On the Intersectoral Migration of Agricultural Labor 1425. The allocation of labor between agriculture and nonagriculture is a resource adjustment fundamental to development. A basic determinant of intersectoral migration is income differences between sectors.
Labor is the single most important factor in determining national income.
As economies grow, agricultural labor declines as a share of total labor and converges to a level of 2 or 3 percent. Off-farm migration facilitates the development of nonagriculture, but historically the process spans decades. Larson and Mundlak argue that the pace of the process is a fundamental outcome of a dynamic equilibrium based on expectations of lifetime earnings and the cost of migration. The authors present an empirical model of the determinants of intersectoral migration. One fundamental determinant is income differences across sectors.