Watering the Seeds of the Rural Economy: Evidence from Groundwater Irrigation in India

71 Pages Posted: 17 Oct 2023

See all articles by Andre Butler

Andre Butler

University of Cambridge

Camille Boudot Reddy

Birkbeck, University of London

Date Written: August 21, 2023

Abstract

We study the impact of private investment in groundwater irrigation on the spatial and sectoral distribution of rural economic activity in India. Exploiting a kink in access to groundwater irrigation, generated from an absolute technological constraint on the operational capacity of irrigation pumps with depth of the water table, we find evidence of a significant improvement in agricultural production accompanied with modest consumption gains. Irrigation causes a substantial increase in population density, but has no effect on the employment rate or labour reallocation between sectors of the economy. Furthermore, irrigated agriculture appears to provide additional employment opportunities for waged labour from surrounding non-irrigated villages. Investigating the dynamic effects from adoption indicate important in-migration of labour in the short-run, as well as changes to fertility/mortality in the long to medium-run.

Keywords: Irrigation, Labour, Structural Change, Agriculture, India

JEL Classification: O12, O33, O53, Q15

Suggested Citation

Butler, Andre and Boudot Reddy, Camille, Watering the Seeds of the Rural Economy: Evidence from Groundwater Irrigation in India (August 21, 2023). Available at SSRN: https://ssrn.com/abstract=4575998 or http://dx.doi.org/10.2139/ssrn.4575998

Andre Butler (Contact Author)

University of Cambridge ( email )

Camille Boudot Reddy

Birkbeck, University of London ( email )

Malet st.
Bloomsbury
London
United Kingdom

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