Pathfinding Paper 8

Using Micro Data to learn about Structural Transformation – David Lagakos

In recent years, a wealth of micro data have become available for economic researchers interested in the process of structural transformation in developing countries. These micro data, which are typical drawn from large surveys of individuals or firms, have proven useful in learning about household occupation and industrial choices, sectoral productivity gaps, firm technology choices and other economic outcomes related to the development process. 

This paper asks how micro data have already informed researchers and policymakers about the process of structural transformation, and the ways in which micro data can shape the research agenda on structural transformation and economic growth going forward. One point of focus is on how household and firm surveys that underly the micro data available to economic researchers can be expanded to better inform research and policy decisions. I discuss, in particular, how to better measure sectoral capital stocks, including for agriculture-specific equipment and land improvement, inventory valuations in retail and wholesale trade, and intangible capital. A second point of focus is how micro data sources could be expanded to learn more about international transfers and investments, in particular direct investments by foreign nationals living abroad. Lastly, I discuss how experimental and quasi-experimental moments taken from micro data sources can be leveraged to better understand the process of structural transformation.