Agriculture in the process of development: A micro-perspective.

• I compare the process of structural transformation in both national data and household panel data in India. • The national data provides evidence that India is in the midst of structural transformation. • Household data tells a similar story, though rural households lag behind in key indicators. • The results have implications for using stylized facts to set policy agenda. This paper compares national-level data from India with 40 years of household panel data from rural India to track sectoral changes in employment and income as well as examine the hypothesis of induced innovation in agricultural production. In the national data, India appears to be in the midst of a structural transformation. The share of agriculture in GDP and employment has shrunk while agricultural output continues to grow. This productivity growth appears to adhere to the induced innovation hypothesis, as productivity per hectare has increased more rapidly than productivity per worker. Many of the same patterns exist in the household data. Tracking households across time, I observe agricultural output has increased, despite more households engaging in off-farm labor. Household agricultural production is highly specialized and has increased its reliance on improved inputs. However, while agricultural income has grown, industrial and service income has remained stagnant, and the relative income of these households has declined in recent years. [ABSTRACT FROM AUTHOR]