Agricultural growth and poverty in an archetypical middle income country: Chile 1987–2003

Is a reduced share of agriculture in the economy an obstacle for the agricultural sector to play an important role in poverty alleviation? What is the key channel, if any, by which agriculture is benefiting the poor in Chile that would be worthwhile to promote in other countries? By answering these questions we expand the literature on poverty and composition of growth by proposing a methodology that allows to disentangle the mechanisms by which agricultural growth can be poverty reducing. We find that in Chile agriculture plays a large role in reducing poverty, and most of this effect is channeled through the labor market.