Why is Agricultural Labor Productivity so Low in the United States?

Todd Schoellman and Berthold Herrendorf

No 1087, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: A big question in development economics is why developing countries are so unproductive in agriculture. This question is hard to answer because of limited data. In this project, we explore what we can learn from agriculture in US states where we have rich data. Focusing on US states has the advantage that there are no major barriers or institutional differences. We provide evidence that there are large labor productivity gaps between nonagriculture and nonagriculture; in some US states the difference between the two is larger than a factor of five. We show that these gaps are not likely to be the result of imperfect measurement. We also show that sectoral differences in human capital and capital shares account for most of these labor productivity gaps.

Date: 2011
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