Can Labor Market Imperfections Explain Changes in the Inverse Farm Size? Productivity Relationship? Longitudinal Evidence from Rural India

28 Pages Posted: 10 Jan 2017

See all articles by Klaus Deininger

Klaus Deininger

World Bank - Development Economics Group (DEC); World Bank - Development Research Group (DECRG)

Sudhir Singh

World Bank

Date Written: August 4, 2016

Abstract

A large national farm panel from India covering a quarter century (1982, 1999, and 2008) is used to show that the inverse farm size-yield relationship weakened significantly over time, despite an increase in the dispersion of farm sizes. Key reasons are substitution of capital for labor in response to nonagricultural labor demand. Family labor was more efficient than hired labor in 1982-99, but not in 1999-2008. In line with labor market imperfections as a key factor, separability of labor supply and demand decisions cannot be rejected in the second period, except in villages with very low nonagricultural labor demand.

Keywords: Community Based Rural Development, Rural Labor Markets, Regional Rural Development, Rural Development Strategy & Policy, Labor Markets, Rural Communities, Rural Development Knowledge & Information Systems

Suggested Citation

Deininger, Klaus and Singh, Sudhir, Can Labor Market Imperfections Explain Changes in the Inverse Farm Size? Productivity Relationship? Longitudinal Evidence from Rural India (August 4, 2016). World Bank Policy Research Working Paper No. 7783, Available at SSRN: https://ssrn.com/abstract=2895509

Klaus Deininger (Contact Author)

World Bank - Development Economics Group (DEC) ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/kdeininger

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Sudhir Singh

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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