Is There Surplus Labor in Rural India?
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.
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- Lamb, Russell L., 2003. "Inverse productivity: land quality, labor markets, and measurement error," Journal of Development Economics, Elsevier, vol. 71(1), pages 71-95, June.
- Juliano J. Assun��o & Luis H. B. Braido, 2007. "Testing Household-Specific Explanations for the Inverse Productivity Relationship," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 980-990.
- de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-417, November.
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