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.