We explore the effect of demographic transition on structural transformation. When fertility declines, a larger share of the population may remain in farming due to agriculture’s reliance on a fixed factor of production, land. We test this hypothesis at the household, state, and country levels. A quasi-experimental family planning program provided to Bangladeshi households, and abortion policy changes around the world in the last 60 years and across U.S. states in the 19th century, generate plausibly exogenous variation in fertility. In each of these three empirical analyses, lower fertility raises the agricultural employment share. Improving human capital can therefore offset the effect of fertility declines on the agricultural employment share.
STEG Working Paper Series
• Research Theme 2: Labour, Home Production, and Structural Transformation at the Level of the Household,
Research Theme 3: Agricultural Productivity and Sectoral Gaps,
Cross-Cutting Issue 1: Gender
Demographic Transition and Structural Transformation
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