Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250525 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14864
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
A consistent finding in the development literature is that average non-farm labor productivity is higher than average farm labor productivity. These differences in average productivity are sometimes used to promote policies which advance the non-farm sector. In this paper, we analyze the importance of two specification choices when comparing productivity gaps, using detailed household panel data from Malawi. Importantly, we are able to calculate both average revenue products (ARPLs) - similar to most of the sectoral productivity gap literature - as well as marginal revenue products (MRPLs). We show that the choice of productivity measure combined with the choice of production function specification can lead to different sectoral productivity rankings. MRPLs from translog production functions suggest the household farm sector is more productive than the household non-farm sector, while MRPLs from a Cobb-Douglas and ARPLs from both a translog and a Cobb-Douglas find the opposite ranking.
Subjects: 
non-farm production
agriculture
labor productivity
JEL: 
J24
J43
O13
Q12
R23
Document Type: 
Working Paper

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