American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
The Human Side of Structural Transformation
American Economic Review
vol. 112,
no. 8, August 2022
(pp. 2774–2814)
Abstract
We document that nearly half of the global decline in agricultural employment was driven by new cohorts entering the labor market. A new dataset of policy reforms supports an interpretation of these cohort effects as human capital. Using a model of frictional labor reallocation, we conclude that human capital growth led to a sharp decline in the agricultural labor supply, accounting, at fixed prices, for 40 percent of the decrease in agricultural employment. This aggregate effect is halved in general equilibrium and it reflects the role of human capital as both a mediating factor and an independent driver of labor reallocation.Citation
Porzio, Tommaso, Federico Rossi, and Gabriella Santangelo. 2022. "The Human Side of Structural Transformation." American Economic Review, 112 (8): 2774–2814. DOI: 10.1257/aer.20201157Additional Materials
JEL Classification
- J22 Time Allocation and Labor Supply
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J43 Agricultural Labor Markets
- L16 Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- Q10 Agriculture: General