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Rural non farm employment in India : Access, income and poverty impact

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  • Lanjouw, Peter
  • Shariff, Abusaleh

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.

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Bibliographic Info

Paper provided by National Council of Applied Economic Research in its series Working Papers with number 81.

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Length: 56 pages
Date of creation: Feb 2002
Date of revision:
Handle: RePEc:nca:ncaerw:81

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Keywords: Employment;

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References

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  1. 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.
  2. Datt, Gaurav & Ravallion, Martin, 1998. "Farm productivity and rural poverty in India," FCND discussion papers 42, International Food Policy Research Institute (IFPRI).
  3. 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.
  4. 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.
  5. Lanjouw, Peter & Stern, Nicholas, 1998. "Economic Development in Palanpur over Five Decades," OUP Catalogue, Oxford University Press, number 9780198288329.
  6. Hazell, Peter B. & Haggblade, Steven, 1990. "Rural - urban growth linkages in India," Policy Research Working Paper Series 430, The World Bank.
  7. Jolliffe, Dean, 1998. "Skills, Schooling, and Household Income in Ghana," World Bank Economic Review, World Bank Group, vol. 12(1), pages 81-104, January.
  8. 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.
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Citations

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Cited by:
  1. Davis, Benjamin & Covarrubias, Katia & Stamoulis, Kostas G. & Winters, Paul C. & Carletto, Calogero & Quinones, Esteban & Zezza, Alberto & Di Giuseppe, Stefania, 2007. "Rural Income Generating Activities: A Cross Country Comparison," 106th Seminar, October 25-27, 2007, Montpellier, France 7913, European Association of Agricultural Economists.
  2. Dil Bahadur Rahut & Maja Micevska Scharf, 2012. "Livelihood diversification strategies in the Himalayas," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(4), pages 558-582, October.
  3. Massimiliano Cali & Carlo Menon, 2009. "Does Urbanisation Affect Rural Poverty? Evidence from Indian Districts," SERC Discussion Papers 0014, Spatial Economics Research Centre, LSE.
  4. Caridad Araujo, 2004. "Can Non-Agricultural Employment Reduce Rural Poverty? Evidence from Mexico," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 41(124), pages 383-399.

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