Employment Generation for the Rural Poor in Asia: Perspectives, Patterns, and Policies

This paper reviews the literature on rural employment and employment generation. It considers three models of rural employment: neoclassical, dual economy, and dynamic linkages. Evidence favors the third model, which explains rural underemployment in terms of labor surplus, and points to local economic linkages as a means for the rural economy to absorb its own surplus labor. The paper summarizes other patterns particularly in relation to the determinants of rural employment, and enumerates elements of an employment strategy for rural Asia. Two of these elements remain controversial, namely, asset reform and prioritization of agriculture. In some cases both elements prove to be beneficial in terms of generating employment; however the evidence is not sufficiently conclusive for a generalization. Hence the rural employment strategy, while rightfully focusing on the rural economy, should be flexible in terms of specifying the mix and focus of interventions within the sector.