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Changes in Labour Market and Domestic Agriculture

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  • Karunagoda, Kamal

Abstract

Sri Lanka’s economy has undergone significant structural changes during the past two decades. The manufacturing and services sectors show a considerable growth during this period and these changes in the economy seem to have had a greater influence on domestic agriculture. Sri Lanka’s rural areas have witnessed the co-existence of rising wage rates of domestic agricultural sector workers with relatively high unemployment levels. The real price of agricultural output shows a declining trend while the real wage rate in domestic agriculture shows an increasing trend. This study examines the influence of the expansion effect of non-agricultural sector on the real wages of the domestic agriculture during the post reform period. Engle and Granger methodology is used to determine the relationship between real agricultural wage rates, capital formation in non-agriculture and wage rate of export agriculture. The results indicate the presence of a long-term relationship between wage rate and capital formation in the non-agriculture sector. Increase in labour productivity, suitable farm mechanization and institutional changes related to land and labour would help to mitigate the negative influence of rising wage rates on domestic agriculture.

Suggested Citation

  • Karunagoda, Kamal, 2004. "Changes in Labour Market and Domestic Agriculture," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 6, pages 1-17.
    • Handle: RePEc:ags:saeasj:205951
    DOI: 10.22004/ag.econ.205951
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    References listed on IDEAS

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    Cited by:

    1. Pathmanathan, Hamsha & Babu, Suresh Chandra & Pal, Chandrashri, 2017. "Building resilience for food systems in postwar communities case study and lessons from northern Sri Lanka," IFPRI discussion papers 1644, International Food Policy Research Institute (IFPRI).
    2. Vicente E. Montano & Rosalia T. Gabronino & Restie E. Torres, 2019. "The curious relationship between agricultural and energy price index: A Vector Error Correction Model (VECM) analysis approach," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 5(3), pages 161-177.
    3. Athula Ranasinghe & Sunimalee Madurawala & Jen Je Su & Thushara Senadeera, 2016. "An empirical investigation of labor shortage in the manufacturing sector in Sri Lanka," Discussion Papers in Economics economics:201605, Griffith University, Department of Accounting, Finance and Economics.

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