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The Macroeconomics of Intensive Agriculture

Authors: Boppart, Timo; Kiernan, Patrick; Krusell, Per; Malmberg, Hannes;

The Macroeconomics of Intensive Agriculture

Abstract

Developing countries employ a very large share of their workforce in agriculture, a sector in which their labor productivity is particularly low. We take a macroeconomic approach to analyze the role of agriculture in development. We construct a new database with systematic measures of inputs and outputs of agricultural production around the globe. The data exhibits strong neoclassical features: going from poor to rich countries, capital and intermediate input prices decline dramatically relative to labor prices; concurrently, capital and intermediate input use in agriculture increases by a factor of 300--800 relative to labor. Input intensification accounts for a bit less than two-thirds of the agricultural labor productivity gap between the poorest and richest countries. Our observations are well explained by an aggregate agricultural production function with input substitutabilities significantly above unity. On the demand side, standard non-homothetic preferences accurately capture how the expenditure share of agricultural goods varies across the development spectrum. We incorporate our findings into a closed-economy general-equilibrium model with minimal distortions, showing that non-agricultural TFP differences play a much more important role than agricultural TFP differences in explaining income differences.

Country
Switzerland
Keywords

economics

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Powered by OpenAIRE graph
Found an issue? Give us feedback
selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
7
Top 10%
Average
Top 10%
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