Beyond Dualism : Agricultural Productivity, Small Towns, and Structural Change in Bangladesh

Emran, M. Shahe ; Shilpi, Forhad

World Bank, Washington, DC

关键词: AGRICULTURAL PRODUCTIVITY;    DUALISM;    STRUCTURAL TRANSFORMATION;    EMPLOYMENT;    RURAL LABOR MARKET;   

DOI  :  10.1596/1813-9450-8087
RP-ID  :  WPS8087

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper uses a framework that goesbeyond rural-urban dualism and highlights the role of smalltown economy in understanding structural change in adeveloping country. It provides a theoretical and empiricalanalysis of the role of agricultural productivity instructural transformation in the labor market. The empiricalwork is based on a general equilibrium model that formalizesthe demand and labor market linkages: the small-town drawslabor away from the rural areas to produce goods andservices whose demand may depend largely on rural income.The theory clarifies the role played by the incomeelasticity of demand and the wage elasticity with respect toproductivity increase in agriculture. For productivitygrowth to lead to a demand effect, the wage elasticity hasto be lower than a threshold. When the demand for goods andservices produced in small towns comes mainly from theadjacent rural areas, the demand effect can outweigh thenegative wage effect, and lead to higher employment in thetown-goods sector. Using rainfall as an instrument, theempirical analysis finds a significant positive effect ofagricultural productivity on rice yield and agriculturalwages.Productivity shock increases wages more in the ruralsample compared with the small town economy sample, butstructural change in employment is more pronounced in thesmall-town economy.In the rural sample, it increasesemployment only in small-scale manufacturing and services.In contrast, a positive productivity shock has large andpositive impacts on employment in construction andtransport, education, health and other services, andmanufacturing employment in larger scale enterprises locatedin small towns and cities. Agricultural productivity growthinduces structural transformation within the services sectorin small towns, with employment in skilled services growingat a faster pace than that of low skilled services.