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Skill Investment, Farm Size Distribution and Agricultural Productivity

By Wenbiao Cai


This paper develops a general equilibrium model to quantitatively explain high labor share, low productivity and small farm size in agriculture in low income countries. The model features individual heterogeneity in skill that is augmentable over time and endogenous occupation choice. Calibrated to the U.S, the model can reproduce bulk of the observed variations in agriculture employment, agriculture output per worker and mean farm size across countries in the sample. In addition, the model generates endogenous farm size distributions that closely resemble the empirical counterpart for a large set of countries. Counterfactual exercises show TFP to be the main source of productivity differences.

Topics: O11 - Macroeconomic Analyses of Economic Development, O15 - Human Resources; Human Development; Income Distribution; Migration, O13 - Agriculture; Natural Resources; Energy; Environment; Other Primary Products, O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology
Year: 2010
DOI identifier: 10.2139/ssrn.1511897
OAI identifier:

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