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STEG Working Paper

Allocation of Female Talent and Cross-Country Productivity Differences

Munseob Lee

The disparities in cross-country labor productivity are greater in agriculture than in other industries. I propose that the misallocation of female talent across sectors distorts productivity. I formalize the theory by using a general equilibrium Roy model with gender specific frictions. If female workers experience higher frictions in non-agricultural sectors, then unproductive female workers will select into agricultural sector. From a sample of 66 countries, I find that low-income countries have higher frictions in non-agricultural industries. By setting frictions to US levels, agricultural labor productivity increases by 16.6 percent and GDP per capita increases by 1.4 percent, primarily in low-income countries.