Changes in Tenancy and Labor Markets and Impact on Livelihoods in Rural Bangladesh: Findings from a Longitudinal Survey 1988-2007

This paper outlines the change in rural factor markets, especially of tenancy and labor markets, to assesses the impact of change on livelihoods. This has been done with household level panel data for 1988 to 2008 period. The paper is based on a longitudinal survey of the same households in a nationally representative sample of 62 villages. The changes in markets are assessed by analyzing participation of households in the markets and the changes in the terms and conditions of the transaction. The impact on livelihoods is assessed by generating household level panel data, and relating changes in some livelihood indicators with the household‟s participation in the market. The land market is found insignificant but the tenancy market is vibrant. The percent of farm households renting land increased from 44 percent in 1988 to 58 percent in 2008, and the percent of holding rented increased from 23 to 36 percent. Sharecropping was predominant tenancy arrangement in 1988; it has given way to fixed rent and medium term lease arrangements. The agricultural labor market has been shrinking, and the mode of labor transactions has changed from seasonal to daily wage contracts and then to piecerated contract. The paper observes that movement of agricultural labor into tenant cultivation fell short of enhancing the probability of exit from poverty partly due to the unfavorable terms of trade of agricultural products over the period under review. Occupational mobility of the labor force from farm to non-farm has traditionally been rewarding in enhancing the growth of rural household income in Bangladesh.