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Oligopsonistic Landlords, Segmented Labor Markets, and the Persistence of Tied-Labor Contracts

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  • Arnab K. Basu

Abstract

This article examines contractual labor arrangements in agrarian economies that persist as a consequence of market power on the part of landlords faced with output uncertainty. We show that a segmented labor market characterized by tied-labor contracts and involuntary unemployment in the lean season are optimal as compared to a labor hiring arrangement that guarantees full employment of labor in both seasons. Government intervention in the form of a specific subsidy targeted toward the hiring of permanent laborers may raise the welfare of all laborers while a specific subsidy directed toward the hiring of casual laborers or the institution of relief programs that absorb the rural unemployed in the lean season leads to the casual laborers in the economy being worse off. Copyright 2002, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/1467-8276.00309
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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 84 (2002)
Issue (Month): 2 ()
Pages: 438-453

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Handle: RePEc:oup:ajagec:v:84:y:2002:i:2:p:438-453

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Cited by:
  1. Arnab Basu, 2013. "Impact of rural employment guarantee schemes on seasonal labor markets: optimum compensation and workers’ welfare," Journal of Economic Inequality, Springer, vol. 11(1), pages 1-34, March.
  2. Alma M. dela Cruz, 2007. "Contractual Arrangements in Agriculture (Northern and Central Luzon Component)," Development Economics Working Papers 22626, East Asian Bureau of Economic Research.
  3. Zimmermann, Laura, 2012. "Labor Market Impacts of a Large-Scale Public Works Program: Evidence from the Indian Employment Guarantee Scheme," IZA Discussion Papers 6858, Institute for the Study of Labor (IZA).
  4. Arnab K. Basu & Nancy H. Chau, 2004. "Exploitation of Child Labor and the Dynamics of Debt Bondage," Journal of Economic Growth, Springer, vol. 9(2), pages 209-238, 06.
  5. Basu, Arnab K., 2011. "Impact of Rural Employment Guarantee Schemes on Seasonal Labor Markets: Optimum Compensation and Workers' Welfare," IZA Discussion Papers 5701, Institute for the Study of Labor (IZA).

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