DP11248 The Role of Crop Type in Cross-Country Income Differences

Author(s): Markus Eberhardt, Dietrich Vollrath
Publication Date: April 2016
Keyword(s): agricultural development, crop type, structural change, technology heterogeneity
JEL(s): C23, F63, O11, O47, Q16
Programme Areas: Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11248

Labor productivity and labor share in the agricultural sector are key determinants of living standards across countries. We show that differences in agricultural technology -- the coefficients on factor inputs in the production function -- account for a substantial portion of cross-country differences in agricultural labor productivity, agricultural labor share, and per capita income. In a panel of 100 countries we document differences in technology estimates associated with major crops, and then illustrate the quantitative implications for development. Counterfactually eliminating crop-type technology heterogeneity reduces variance in log income per capita by 25%, and raises the median by 60%.