The Agricultural Wage Gap: Evidence from Brazilian Micro-data

A key feature of developing economies is that wages in agriculture are below those of other sectors. Using Brazilian household surveys and administrative panel data, Alvarez (2020) uses information on workers who switch sectors and workers with multiple jobs to assess the role of worker composition in explaining this gap. The evidence is consistent with the presence of significant intersector sorting in Brazil. A calibrated sorting model can account for the wage gap level observed, as well as its decline, as the economy transitioned out of agriculture.