The role of micro data in understanding structural transformation

Abstract

ABSTRACT This paper reviews the use of micro-level data for research on structural transformation. We survey the literature on the topics of cross-country productivity gaps, within-country gaps, labor markets, land markets, and infrastructure, and summarize how the use of micro-level data enhances our understanding of structural transformation that is otherwise hard to achieve with aggregate-level data. We suggest several areas that may benefit from more use of micro-level data. Our recommendations on data effort include collecting more panel data over longer years, especially from developing countries, complementing current time use surveys with data from developing countries, and improving the measurement of non-agricultural output. Relatedly, better measurement of physical and business capital is desired. Lastly, we note the rising trend of joining experimental data with structural models and encourage more studies to take advantage of exploiting the strength of both approaches.