The A-Side

Abstract

We show that the global human capital increase during the 20 th century contributed to structural transformation. We document that almost half of the decline in aggregate agricultural employment was driven by new birth cohorts entering the labor market. We use data on educational attainment and compile a comprehensive list of policy reforms to interpret the di ff erences in agricultural employment across cohorts. We find that the increase in schooling led to a sharp reduction in the agricultural labor supply by equipping younger cohorts with skills more valued out of agriculture. Interpreted through a model of frictional labor reallocation, these facts imply that human capital growth accounts for about 20% of the global decline in agricultural employment. ∗ We thank Rachel Ngai for an insightful discussion of an early version of the paper. We thank for helpful comments Andrew Atkeson, Martin Beraja, Francesco Caselli, Joe Kaboski, David Lagakos, Tim Lee, Jonathan Heathcote, Ben Moll, Simon Mongey, Karthik Muralidharan, Michael Peters, Todd Schoellman, Jonathan Vogel. We have also benefited from the reactions of several seminar and conference audience, including participants at the CEPR MG Annual Programme Meeting, Barcelona GSE Summer Forum, MIT, UBC, and UCLA. Angus Lewis and Xiao Ma provided excellent research assistance. †