Weather Shocks and Structural Transformation: Micro Evidence from Africa
Presented by:
Chunxiao Jing
Practice Job Talk
Department of Agricultural and Applied Economics
University of Wisconsin-Madison
Thursday, October 1, 2026
3:45 pm-5:15 pm
Taylor-Hibbard Seminar Room (Rm103)
Structural transformation, the movement of labor from agriculture to more productive non-agricultural activities, is a central driver of economic development, yet it has remained slow in Sub-Saharan Africa. Existing theories emphasize different stages of this process, including labor release from agriculture (\cite{lewis1954economic}), labor reallocation under transition frictions, and labor absorption into non-agricultural employment (\cite{harris1970migration}). This paper develops a structural framework that unifies these perspectives by decomposing structural transformation into three sequential stages: labor release, labor reallocation, and labor absorption. Using household panel data from Niger, Malawi, and Ethiopia, I first employ a Random Forest algorithm to construct a measure of weather-induced agricultural productivity and exploit the resulting productivity shocks to estimate the causal effect of agricultural productivity on structural transformation outcomes. I then estimate the structural model using the simulated method of moments to identify the economic constraints governing each stage of the transformation process and conduct counterfactual policy analysis. The results show that agricultural productivity consistently releases labor from agriculture across all three countries, but the subsequent transition differs markedly. Subsistence constraints are the primary barrier in Niger and Malawi, whereas labor reallocation frictions and limited labor absorption constrain structural transformation in Ethiopia. These findings demonstrate that labor release alone is insufficient for successful structural transformation and that effective policy depends on identifying the country-specific binding constraint at each stage of the transformation process.