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American Economic Journal: Macroeconomics: Vol. 3 No. 3 (July 2011)

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Structural Change Out of Agriculture: Labor Push versus Labor Pull

Article Citation

Alvarez-Cuadrado, Francisco, and Markus Poschke. 2011. "Structural Change Out of Agriculture: Labor Push versus Labor Pull." American Economic Journal: Macroeconomics, 3(3): 127-58.

DOI: 10.1257/mac.3.3.127

Abstract

A declining agricultural employment share is a key feature of economic development. Its main drivers are: improvements in agricultural technology combined with Engel's law release resources from agriculture ("labor push"), and improvements in industrial technology attract labor out of agriculture ("labor pull"). We present a model with both channels and evaluate the importance using data on 12 industrialized countries since the nineteenth century. Results suggest that the "pull" channel dominated until 1920 and the "push" channel dominated after 1960. The "pull" channel mattered more in countries in early stages of the structural transformation. This contrasts with modeling choices in recent literature. (JEL E23, N10, N53, O10, O47).

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Authors

Alvarez-Cuadrado, Francisco (McGill U and CIREQ)
Poschke, Markus (McGill U and CIREQ)

JEL Classifications

E23: Macroeconomics: Production
N10: Economic History: Macroeconomics and Monetary Economics; Growth and Fluctuations: General, International, or Comparative
N53: Economic History: Agriculture, Natural Resources, Environment, and Extractive Industries: Europe: Pre-1913
O10: Economic Development: General
O47: Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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