Do differences between agriculture and nonagriculture matter for understanding the cross-country income dispersion? We show that they do. We find that by abstracting from technolog-ical differences across sectors, particularly the use of land, standard Solow residuals underesti-mate underlying productivity differences across countries. Specifically, we find the cross-country dispersion of both agricultural and nonagricultural TFPs to be larger than the dispersion of stan-dard Solow residuals. We also show that the contribution of TFP and factors of production to cross-country income variance depends critically on the explanation of the wage gap between agriculture and nonagriculture. In particular, the contribution of TFP ranges from 32% when low human capital in rural areas explains the wage gap, to 71% when high human capital in the cities explains this gap.