SEMAINE D'ÉTUDE SUR LE ROLE DE L’ANALYSE ECONOMETRIQUE ETC. 1145
and upon changes in the real factor costs of agricultural pro-
ducts that are required if economic growth is to occur (1).
When the level of per capita income exceeds some very low
level, perhaps $50, the income elasticity of demand for food
is less than unity. Since the income elasticity of demand for
all goods and services is unity, the income elasticity of demand
for nonfarm goods and services exceeds unity. An increase in
real per capita income, ignoring for the moment the source
of the increase, will result in a larger increase in the demand
for nonfarm than for farm products. Thus the relative output
of farm products will decline as a share of the total output.
However, the assumptions made are not sufficient to show
that the share of the labor force engaged in agriculture will
lecline. If the growth in the net marginal product of labor
engaged in nonagriculture is enough greater than the increase
in the net marginal product of labor engaged in agriculture,
the proportion of the labor force engaged in agriculture could
remain unchanged. As a rough approximation, if there is no
change in population, if the ratio of the change in the mar-
ginal product of labor in agriculture to the change in marginal
product of nonfarm labor is equal to the ratio of the income
elasticies of demand for food and nonfood products, the secto-
rial distribution of employment will remain unchanged. How-
ever, this rough approximation will hold only if there are bar
ers to the movement of labor from agriculture into nonagricul-
tural pursuits. The larger increase in the marginal product
of labor in the nonagricultural sector than in the farm sector
means that the return to labor in agriculture will fall in a re-
ative sense. Thus labor will move from agriculture into the
nonagricultural sector in response to a change in the earnings
(") HERBERT SIMON, Effects of Increased Productivity upon the Rati
of Urban to Rural Population. « Econometrica » XV No ‘Januarv
1947), 31-42.
F.H. GRUEN, Agriculture and Technical
Économics », XLIII, No. + (November 1061)
io] Johnson - pag.
_ 4
