IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v64y2014icp273-285.html
   My bibliography  Save this article

Escalation of Real Wages in Bangladesh: Is it the Beginning of Structural Transformation?

Author

Listed:
  • Zhang, Xiaobo
  • Rashid, Shahidur
  • Ahmad, Kaikaus
  • Ahmed, Akhter

Abstract

Using data from multiple sources, we show that the real wages in Bangladesh, particularly in rural areas and for female workers, have accelerated in recent years. Real wage escalation is likely the result of a combination of more job opportunities in the nonfarm sector, especially in the manufacturing sector, and a greater inflow of remittances, primarily from unskilled male workers overseas. Since physical labor is the most important asset for the poor, the escalation in real wages has boosted the poor’s earnings, helping them improve their livelihood and escape poverty.

Suggested Citation

  • Zhang, Xiaobo & Rashid, Shahidur & Ahmad, Kaikaus & Ahmed, Akhter, 2014. "Escalation of Real Wages in Bangladesh: Is it the Beginning of Structural Transformation?," World Development, Elsevier, vol. 64(C), pages 273-285.
    • Handle: RePEc:eee:wdevel:v:64:y:2014:i:c:p:273-285
    DOI: 10.1016/j.worlddev.2014.06.015
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X14001740
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.worlddev.2014.06.015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Shahidur R. Khandker & Hussain A. Samad & Rubaba Ali, 2013. "Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh," Working Papers 15, Institute of Microfinance (InM).
    2. Gary S. Fields, 2004. "Dualism In The Labor Market: A Perspective On The Lewis Model After Half A Century," Manchester School, University of Manchester, vol. 72(6), pages 724-735, December.
    3. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014, December.
    4. Mahabub Hossain & Firdousi Naher & Quazi Shahabuddin, 2005. "Food Security and Nutrition in Bangladesh: Progress and Determinants," The Electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization of the United Nations, vol. 2(2), pages 103-132.
    5. Ravallion, Martin, 1990. "Rural Welfare Effects of Food Price Changes under Induced Wage Responses: Theory and Evidence for Bangladesh," Oxford Economic Papers, Oxford University Press, vol. 42(3), pages 574-585, July.
    6. World Bank, 2008. "Poverty Assessment for Bangladesh," World Bank Publications - Reports 28239, The World Bank Group.
    7. repec:pri:rpdevs:deaton_prices_poverty_india is not listed on IDEAS
    8. World Bank, 2013. "Bangladesh - Poverty Assessment : Assessing a Decade of Progress in Reducing Poverty, 2000-2010," World Bank Publications - Reports 16622, The World Bank Group.
    9. Bardhan, Pranab K, 1979. "Wages and Unemployment in a Poor Agrarian Economy: A Theoretical and Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 479-500, June.
    10. Justin Yifu Lin, 2012. "New Structural Economics : A Framework for Rethinking Development and Policy," World Bank Publications - Books, The World Bank Group, number 2232, December.
    11. Boyce, James K & Ravallion, Martin, 1991. "A Dynamic Econometric Model of Agricultural Wage Determination in Bangladesh," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(4), pages 361-376, November.
    12. Rossitza B. Wooster & David S. Diebel, 2010. "Productivity Spillovers from Foreign Direct Investment in Developing Countries: A Meta-Regression Analysis," Review of Development Economics, Wiley Blackwell, vol. 14(s1), pages 640-655, August.
    13. Swadesh R. Bose, 1968. "Trend of Real Income of the Rural Poor in East Pakistan, 1949-66," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 8(3), pages 452-488.
    14. Ahmed, Iqbal, 1981. "Wage Determination in Bangladesh Agriculture," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 298-322, July.
    15. World Bank, 2008. "Bangladesh - Poverty Assessment for Bangladesh : Creating Opportunities and Bridging the East-West Divide," World Bank Publications - Reports 6144, The World Bank Group.
    16. World Bank, 2008. "Bangladesh - Poverty Assessment for Bangladesh : Creating Opportunities and Bridging the East-West Divide," World Bank Publications - Reports 7886, The World Bank Group.
    17. Ranis, Gustav, 2012. "Labor Surplus Revisited," Working Papers 107, Yale University, Department of Economics.
    18. Zhang, Xiaobo & Yang, Jin & Wang, Shenglin, 2011. "China has reached the Lewis turning point," China Economic Review, Elsevier, vol. 22(4), pages 542-554.
    19. Gustav Ranis, 2012. "Labor Surplus Revisited," Working Papers 1016, Economic Growth Center, Yale University.
    20. Rashid, Shahidur, 2002. "Dynamics of agricultural wage and rice price in Bangladesh," MSSD discussion papers 44, International Food Policy Research Institute (IFPRI).
    21. Jean Olson Lanjouw & Peter Lanjouw, 2001. "How to Compare Apples And Oranges: Poverty Measurement Based on Different Definitions of Consumption," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(1), pages 25-42, March.
    22. Xiaobo Zhang & Kevin Zhang, 2003. "How Does Globalisation Affect Regional Inequality within A Developing Country? Evidence from China," Journal of Development Studies, Taylor & Francis Journals, vol. 39(4), pages 47-67.
    23. S. R. Bose, 1968. "Trend of Real Income of the Rural Poor in East Pakistan, 1949-66 -- An Indirect Estimate," PIDE-Working Papers 1968:068, Pakistan Institute of Development Economics.
    24. Rossitza B. Wooster & David S. Diebel, 2010. "Productivity Spillovers from Foreign Direct Investment in Developing Countries: A Meta‐Regression Analysis," Review of Development Economics, Wiley Blackwell, vol. 14(3), pages 640-655, August.
    25. Nguyen Viet Cuong & Daniel Mont, 2012. "Economic impacts of international migration and remittances on household welfare in Vietnam," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 11(2), pages 144-163, June.
    26. Rashid, Shahidur & Tefera, Nigussie & Lemma, Solomon & Yunus, Mohammad, 2014. "Population pressure and livelihood dynamics: Panel evidence from Bangladesh," IFPRI discussion papers 1326, International Food Policy Research Institute (IFPRI).
    27. Ranis, Gustav, 2012. "Labor Surplus Revisited," Center Discussion Papers 133411, Yale University, Economic Growth Center.
    28. Dorosh, Paul A. & Rashid, Shahidur, 2013. "Trade subsidies, export bans and price stabilization: Lessons of Bangladesh–India rice trade in the 2000s," Food Policy, Elsevier, vol. 41(C), pages 103-111.
    29. Mark R. Rosenzweig, 1980. "Neoclassical Theory and the Optimizing Peasant: An Econometric Analysis of Market Family Labor Supply in a Developing Country," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(1), pages 31-55.
    30. Dipak Mazumdar, 1959. "The Marginal Productivity Theory of Wages and Disguised Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 26(3), pages 190-197.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Muhammad Waqar Akram & Nida Akram & Hongshu Wang & Shahla Andleeb & Khalil Ur Rehman & Umair Kashif & Syed Farhaan Hassan, 2020. "Socioeconomics Determinants to Adopt Agricultural Machinery for Sustainable Organic Farming in Pakistan: A Multinomial Probit Model," Sustainability, MDPI, vol. 12(23), pages 1-15, November.
    2. Matthew McCartney, 2017. "Bangladesh 2000-2017: Sustainable Growth, Technology and the Irrelevance of Productivity," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 22(Special E), pages 183-198, September.
    3. Sèna Kimm Gnangnon, 2020. "Development aid, remittances inflows and wages in the manufacturing sector," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 22(2), pages 278-304, December.
    4. Paudel, Gokul P. & KC, Dilli Bahadur & Rahut, Dil Bahadur & Khanal, Narayan P. & Justice, Scott E. & McDonald, Andrew J., 2019. "Smallholder farmers' willingness to pay for scale-appropriate farm mechanization: Evidence from the mid-hills of Nepal," Technology in Society, Elsevier, vol. 59(C).
    5. Hassan, Md. Fuad & Kornher, Lukas, 2020. "Is mechanization in agriculture curse or blessing for the rural labor market in Bangladesh?," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304543, Agricultural and Applied Economics Association.
    6. Chaudhary, Ashok Kumar & Pandit, Ram & Burton, Michael, 2022. "Farmyard manure use and adoption of agricultural mechanization among smallholders in the Mahottari District, Nepal," World Development Perspectives, Elsevier, vol. 25(C).
    7. Paudel, Gokul P. & KC, Dilli Bahadur & Rahut, Dil Bahadur & Justice, Scott E. & McDonald, Andrew J., 2019. "Scale-appropriate mechanization impacts on productivity among smallholders: Evidence from rice systems in the mid-hills of Nepal," Land Use Policy, Elsevier, vol. 85(C), pages 104-113.
    8. Md. Fuad Hassan & Lukas Kornher, 2022. "Farm wage and Rice Price dynamics in Bangladesh," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 14(1), pages 127-146, February.
    9. Shahidul Islam & Subhadip Ghosh & Mohua Podder, 2022. "Fifty years of agricultural development in Bangladesh: a comparison with India and Pakistan," SN Business & Economics, Springer, vol. 2(7), pages 1-41, July.
    10. Valerie Mueller & Emily Schmidt & Dylan Kirkleeng, 2020. "Structural Change and Women’s Employment Potential in Myanmar," International Regional Science Review, , vol. 43(5), pages 450-476, September.
    11. Jane Lankes & Mary K. Shenk & Mary C. Towner & Nurul Alam, 2022. "Dowry Inflation: Perception or Reality?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 41(4), pages 1641-1672, August.
    12. Donato Romano & Silvio Traverso, 2020. "Disentangling the Impact of International Migration on Food and Nutrition Security of Left-Behind Households: Evidence from Bangladesh," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(4), pages 783-811, September.
    13. Sayeda Sabrina Ali & Md. Raju Ahmad & Jalal Uddin Mohammad Shoaib & Mohammad Aliuzzaman Sheik & Mohammad Imam Hoshain & Rebecca L. Hall & Katrina A. Macintosh & Paul N. Williams, 2021. "Pandemic or Environmental Socio-Economic Stressors Which Have Greater Impact on Food Security in the Barishal Division of Bangladesh: Initial Perspectives from Agricultural Officers and Farmers," Sustainability, MDPI, vol. 13(10), pages 1-22, May.
    14. Subir Bairagi & Muntaseer Kamal, 2019. "Is Bangladesh’s Economy Approaching the Lewis Turning Point?," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 20(1), pages 19-45, March.
    15. Sen, Binayak & Dorosh, Paul & Ahmed, Mansur, 2021. "Moving out of agriculture in Bangladesh: The role of farm, non-farm and mixed households," World Development, Elsevier, vol. 144(C).
    16. Aryal, Jeetendra Prakash & Rahut, Dil Bahadur & Maharjan, Sofina & Erenstein, Olaf, 2019. "Understanding factors associated with agricultural mechanization: A Bangladesh case," World Development Perspectives, Elsevier, vol. 13(C), pages 1-9.
    17. Gnangnon, Sèna Kimm, 2020. "Development Aid, Remittances Inflows and Wages in the Manufacturing Sector of Recipient-Countries," EconStor Preprints 213439, ZBW - Leibniz Information Centre for Economics.
    18. Aryal, Jeetendra Prakash & Rahut, Dil Bahadur & Thapa, Ganesh & Simtowe, Franklin, 2021. "Mechanisation of small-scale farms in South Asia: Empirical evidence derived from farm households survey," Technology in Society, Elsevier, vol. 65(C).
    19. Toufique, Kazi Ali, 2017. "Bangladesh Experience in Rural Development: The Success and Failure of the Various Models Used," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 40(1-2), pages 97-118, March-Jun.
    20. Paudel, Gokul P. & Gartaula, Hom & Rahut, Dil Bahadur & Craufurd, Peter, 2020. "Gender differentiated small-scale farm mechanization in Nepal hills: An application of exogenous switching treatment regression," Technology in Society, Elsevier, vol. 61(C).
    21. Lopez-Ridaura, Santiago & Frelat, Romain & van Wijk, Mark T. & Valbuena, Diego & Krupnik, Timothy J. & Jat, M.L., 2018. "Climate smart agriculture, farm household typologies and food security," Agricultural Systems, Elsevier, vol. 159(C), pages 57-68.
    22. Hassan, F., 2018. "Farm Wage and Rice Price Dynamics in Bangladesh," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277415, International Association of Agricultural Economists.
    23. Bachewe, Fantu Nisrane & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu Seyoum, 2016. "Non-farm income and labor markets in rural Ethiopia," ESSP working papers 90, International Food Policy Research Institute (IFPRI).
    24. Taslim, M.A. & Taslim, Q.N., 2018. "Productivity and Agricultural Real Wage in Bangladesh: 1959-60 to 2012-13," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 41(01), pages 1-30, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Akhand Akhtar Hossain, 2008. "Rural Labour Market Developments, Agricultural Productivity, and Real Wages in Bangladesh, 1950–2006," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(1), pages 89-114.
    2. Ishwor Adhikari, 2022. "The conundrum of labour shortage in a labour surplus economy: an investigation of Nepal," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(2), pages 404-435, December.
    3. Shadlee Rahman, 2018. "A Critical Examination of Inter-temporal Spatial Poverty Trends in Bangladesh," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(1), pages 108-123, March.
    4. Maren Duvendack & Richard Palmer-Jones, 2017. "Micro-Finance, Women’s Empowerment and Fertility Decline in Bangladesh: How Important Was Women’s Agency?," Journal of Development Studies, Taylor & Francis Journals, vol. 53(5), pages 664-683, May.
    5. G. Jacoby , Hanan & Dasgupta, Basab, 2014. "Household Exposure to Food Price Shocks in Rural Bangladesh," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 37(1-2), pages 83-100, March-Jun.
    6. Berg Claudia & Emran M. Shahe, 2020. "Microfinance and Vulnerability to Seasonal Famine in a Rural Economy: Evidence from Monga in Bangladesh," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(3), pages 1-36, July.
    7. Hassan, Md. Fuad & Kornher, Lukas, 2020. "Is mechanization in agriculture curse or blessing for the rural labor market in Bangladesh?," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304543, Agricultural and Applied Economics Association.
    8. Briones, Roehlano & Felipe, Jesus, 2013. "Agriculture and Structural Transformation in Developing Asia: Review and Outlook," ADB Economics Working Paper Series 363, Asian Development Bank.
    9. A. T. M. Hasibul Islam & Syed Abul Basher & A. K. Enamul Haque, 2022. "The impact of mobile money on long-term poverty: evidence from Bangladesh," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(2), pages 436-455, December.
    10. Danquah, Michael, 2018. "Technology transfer, adoption of technology and the efficiency of nations: Empirical evidence from sub Saharan Africa," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 175-182.
    11. Md. Fuad Hassan & Lukas Kornher, 2022. "Farm wage and Rice Price dynamics in Bangladesh," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 14(1), pages 127-146, February.
    12. José Roche, 2013. "Monitoring Progress in Child Poverty Reduction: Methodological Insights and Illustration to the Case Study of Bangladesh," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 112(2), pages 363-390, June.
    13. Lavopa, A., 2014. "Catching up and lagging behind in a balance-of-payments-constrained dual economy," MERIT Working Papers 2014-042, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Sushenjit Bandyopadhyay & Emmanuel Skoufias, 2015. "Rainfall variability, occupational choice, and welfare in rural Bangladesh," Review of Economics of the Household, Springer, vol. 13(3), pages 589-634, September.
    15. Gulesci, Selim & Battaglia, Marianna & Madestam, Andreas, 2018. "Repayment Flexibility and Risk Taking: Experimental Evidence from Credit Contracts," CEPR Discussion Papers 13329, C.E.P.R. Discussion Papers.
    16. Agnes R. Quisumbing & Neha Kumar & Julia A. Behrman, 2018. "Do shocks affect men's and women's assets differently? Evidence from Bangladesh and Uganda," Development Policy Review, Overseas Development Institute, vol. 36(1), pages 3-34, January.
    17. Peter Davis & Bob Baulch, 2010. "Casting the net wide and deep: lessons learned in a mixed-methods study of poverty dynamics in rural Bangladesh," Working Papers id:2674, eSocialSciences.
    18. Asadullah, M. Niaz & Savoia, Antonio & Mahmud, Wahiduddin, 2014. "Paths to Development: Is there a Bangladesh Surprise?," World Development, Elsevier, vol. 62(C), pages 138-154.
    19. Subir Bairagi & Muntaseer Kamal, 2019. "Is Bangladesh’s Economy Approaching the Lewis Turning Point?," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 20(1), pages 19-45, March.
    20. repec:eee:labchp:v:3:y:1999:i:pb:p:2859-2939 is not listed on IDEAS
    21. Dessing, Maryke, 2004. "Implications for minimum-wage policies of an S-shaped labor-supply curve," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 543-568, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:64:y:2014:i:c:p:273-285. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.