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Labor Market Performance and the Farm Size-Productivity Relationship in Rural India

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  • Deininger, Klaus
  • Jin, Songqing
  • Liu, Yanyan
  • Singh, Sudhir

Abstract

In this paper, we use a three-round farm-level panel from rural India to explore the existence and evolution of the inverse relationship between farm size and productivity that has been found in a large empirical literature. While present throughout, the inverse relationship weakened significantly over time; the estimated elasticity of productivity with respect to farm size increased from 0.73 to 0.95 from 1982 to 2007. Key drivers are better functioning labor markets and a narrowing of efficiency differences between own and hired labor, possibly due to greater use of machinery. Structural transformation and a transition towards larger farms thus did not hurt productivity and economic efficiency.

Suggested Citation

  • Deininger, Klaus & Jin, Songqing & Liu, Yanyan & Singh, Sudhir, 2015. "Labor Market Performance and the Farm Size-Productivity Relationship in Rural India," 2015 Conference, August 9-14, 2015, Milan, Italy 212720, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:212720
    DOI: 10.22004/ag.econ.212720
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    Keywords

    Farm Management; International Development; Marketing;
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