Agricultural composition and labor productivity

Labor productivity differences between developing and developed countries are much larger in agriculture than non-agriculture. We show that agricultural composition across explain a substantial part of these labor differences. To this end, we group products into two sectors: capital-intensive labor-intensive agriculture. As the economy develops capital accumulates, price goods relative to increases. This change drives process structural moves land farmers sector, increasing illustrate mechanism using multisector growth model generates transitional dynamics consistent with patterns observed Brazil also cross-country data.