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THE AGRICULTURAL PRODUCTIVITY GAP IN EUROPE
Author(s) -
Cai Wenbiao,
Pandey Manish
Publication year - 2015
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12214
Subject(s) - agriculture , productivity , economics , agricultural economics , agricultural productivity , gross domestic product , wage , value (mathematics) , per capita , demographic economics , labour economics , econometrics , macroeconomics , geography , statistics , mathematics , population , demography , archaeology , sociology
For 15 European countries over the 1970–2004 period we find large and persistent agricultural productivity gaps, the ratio of value added per hour in nonagriculture to that in agriculture. Comparing the gap in value added per hour to the wage gap between the two sectors suggests that value added in the data is mismeasured. We further find that, controlling for differences in gross domestic product per capita and institutions, the mismeasurement is positively related to self‐employed share of hours in agriculture. Correcting for underreporting of self‐employment income using our preferred correction factor reduces the measured agricultural productivity gap by 38%. These findings suggest that underreporting can account for a significant portion of the measured agricultural productivity gap. ( JEL E01, O47, O52, Q10)