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Rural Non-Farm Employment in India: Access, Income, Farm, Poverty Impact

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  • Peter Lanjouw

    ()

  • Abusaleh Shariff

    ()

  • Dil Bahadur Rahut

Abstract

Attention has been paid to the significance of the non-farm sector in the rural Indian economy since the early 1970s. The importance of earnings from secondary non-farm occupations is not well documented. In this paper an attempt is made to assess the contribution of the nonfarm sector across population quintiles defined in terms of average per capita income. The correlates of employment in the non-farm sector and the direct impact of a growing non-farm sector on agricultural wage rates in rural India have also been examined. The study is based on rural data from 32,000 households belonging to 1765 villages across all parts of India collected by the National Council of Applied Economic Research in 1993-94. Analysis shows that non-farm incomes account for a significant proportion of household income in rural India with considerable variation across quintiles and across major Indian states. Education, wealth, caste, village level agricultural conditions, population densities and other regional effects influence in determining the access to non-farm occupations. Direct contribution of the nonfarm sector to poverty reduction is possibly quite muted as the poor lack the assets. It has also been found that the growth of certain non-farm sub-sectors is strongly associated with higher agricultural wage rates. The analysis presented in this study suggests that the policy makers seeking to maximise the impact of an expanding non-farm sector on rural poverty, should concentrate on two fronts. First, efforts should be focused on removing the barriers to the entry of the poor into the non-farm sector. This involves improving the educational level in rural areas. Second, the policy makers should note the strong evidence of an impact on agricultural wages of the expansion in rural construction employment. [WP No. 81]

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Bibliographic Info

Paper provided by eSocialSciences in its series Working Papers with number id:913.

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Date of creation: Mar 2007
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Handle: RePEc:ess:wpaper:id:913

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Related research

Keywords: farm; non-farm; employment; agriculture; labournmarket; irrigation; production linkaga;

References

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  1. Abhijit Banerjee & Kaivan Munshi, 2000. "Networks, Migration and Investment: Insiders and Outsiders in Tirupur's Production Cluster," William Davidson Institute Working Papers Series 313, William Davidson Institute at the University of Michigan.
  2. Gaurav Datt & Martin Ravallion, 1998. "Farm productivity and rural poverty in India," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 62-85.
  3. Jayraman, Raji & Lanjouw, Peter, 1998. "The evolution of poverty and inequality in Indian villages," Policy Research Working Paper Series 1870, The World Bank.
  4. Haggblade, Steven & Liedholm, Carl & Mead, Donald C., 1986. "The Effect of Policy and Policy Reforms on Non-Agricultural Enterprises and Employment in Developing Countries: A Review of Past Experiences," Food Security International Development Working Papers 54744, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  5. Ravallion, Martin & Datt, Gaurav, 1999. "When is growth pro-poor? Evidence from the diverse experiences of India's states," Policy Research Working Paper Series 2263, The World Bank.
  6. Vijverberg, W., 1988. "Profits From Self-Employment - A Case Study Of Cote D'Ivoire," Papers 43, World Bank - Living Standards Measurement.
  7. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, World Bank Group, vol. 10(1), pages 1-25, January.
  8. Jolliffe, Dean, 1998. "Skills, Schooling, and Household Income in Ghana," World Bank Economic Review, World Bank Group, vol. 12(1), pages 81-104, January.
  9. Martin Ravallion & Gaurav Datt, 1996. "India's Checkered History in Fight against Poverty: Are There Lessons for the Future?," Development Research Unit Working Paper Series archive-33, Monash University, Department of Economics.
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Cited by:
  1. Pham, Hung T, 2006. "Rural Nonfarm Employment Under Trade Reform Evidence From Vietnam, 1993-2002," MPRA Paper 6476, University Library of Munich, Germany.

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