Can Labor Market Imperfections Explain Changes in the Inverse Farm Size? Productivity Relationship? Longitudinal Evidence from Rural India
28 Pages Posted: 10 Jan 2017
Date Written: August 4, 2016
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
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