Can Labor Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship ? longitudinal evidence from rural India
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World Bank, Washington, DC
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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.
Palabras clave
agricultural productivity, labor markets, structural transformation, growth, farm size, labor demand, family labor