Mechanization and the Intersectoral Migration of Agricultural Labor

Abstract

AbstractFor most countries, the historical path to development includes a sectoral shift of labor from agriculture to other sectors, an inflow of capital to agriculture, and a boost in land productivity. Early in the process of structural transformation, when populations are primarily rural and agrarian, the pace of sectoral migration can appear slow, as births that occur in much larger rural populations nearly match out-migration. As populations become increasingly urban, the dynamics shift, as rural populations experience continued out-migration matched with a declining share of births. This sets the stage for rising wages and labor-saving mechanization in agriculture. In many places, mechanization is associated with economies of scale that encourage a transformation in farm structures toward larger farms. Still, farm structures have been slow to change in Asia and Africa, where most farms are small, limiting potential productivity gains. This chapter uses a cross-country panel of data spanning five decades to examine the relationships among sectoral migration, gaps in sectoral incomes, and mechanization.