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Is There Surplus Labor in Rural India?

Author

Listed:
  • Foster, Andrew D.
  • Rosenzweig, Mark R.

Abstract

We show empirically using panel data at the plot and farm level and based on a model incorporating supervision costs, risk, credit-market imperfections and scale-economies associated with mechanization that small-scale farming is inefficient in India. Larger farms are more profitable per acre, more mechanized, less constrained in input use after bad shocks, and employ less per-acre labor than small farms. Based on our structural estimates of the effects of farm size on labor use and the distribution of Indian landholdings, we estimate that over 20% of the Indian agricultural labor force is surplus if minimum farm scale is 20 acres.

Suggested Citation

  • Foster, Andrew D. & Rosenzweig, Mark R., 2010. "Is There Surplus Labor in Rural India?," Center Discussion Papers 95273, Yale University, Economic Growth Center.
    • Handle: RePEc:ags:yaleeg:95273
    DOI: 10.22004/ag.econ.95273
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    References listed on IDEAS

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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