Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
The process of economic development is characterized by substantial resource reallocations across sectors. In this paper, we construct a baseline multi-sector model with barriers to the movement of labor from low-productivity traditional agriculture to modern sectors. With such barriers in place, we show that improved productivity in modern sectors (including agriculture) or reduced transportation costs may lead to rising agricultural employment and, through terms of trade effects, may harm traditional farmers if this sector is larger than a critical level. This suggests that policy advice based on the earlier literature needs revision. Reducing mobility barriers (through reduced costs for skills acquisition and institutional changes) and improving the productivity of traditional farmers must precede policies designed to increase the productivity of modern sectors or reduce transportation costs.