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Labor-tying in a Poor Agrarian Economy: A Theoretical and Empirical Analysis

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  • Pranab K. Bardhan

Abstract

In this paper we show how tied labor, contrary to its common characterization as a feudal relic and as a symptom of economic stagnation, may actually be strengthened by capitalist agricultural development. We construct a simple two-period theoretical model of a two-tiered labor market to show how the proportional importance of voluntary labor-tying contracts may increase with yield-increasing improvements and with a tightening of the labor market. We then provide in support of these hypotheses some general historical as well as more detailed econometric evidence from a variety of cross-sectional data in rural India.

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  • Pranab K. Bardhan, 1983. "Labor-tying in a Poor Agrarian Economy: A Theoretical and Empirical Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 501-514.
    • Handle: RePEc:oup:qjecon:v:98:y:1983:i:3:p:501-514.
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    File URL: http://hdl.handle.net/10.2307/1886023
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