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Is There Surplus Labor in Rural India?

  • Mark R. Rosenzweig

    ()

    (Department of Economics, Yale University)

  • Andrew D. Foster

    ()

    (Department of Economics, Brown University)

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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File URL: http://www.econ.yale.edu/growth_pdf/cdp991.pdf
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Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 991.

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Length: 48 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:egc:wpaper:991
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  1. Christopher B. Barrett & Marc F. Bellemare & Janet Y. Hou, 2010. "Reconsidering Conventional Explanations of the Inverse Productivity-Size Relationship," Working Papers 10-22, Duke University, Department of Economics.
  2. 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.
  3. Rosenzweig, Mark R. & Binswanger, Hans P., 1992. "Wealth, weather risk, and the composition and profitability of agricultural investments," Policy Research Working Paper Series 1055, The World Bank.
  4. 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.
  5. Allen, Robert C., 1988. "The growth of labor productivity in early modern English agriculture," Explorations in Economic History, Elsevier, vol. 25(2), pages 117-146, April.
  6. Lanjouw, Peter & Murgai, Rinku, 2009. "Poverty decline, agricultural wages, and non-farm employment in rural India : 1983-2004," Policy Research Working Paper Series 4858, The World Bank.
  7. Bhalla, Surjit S & Roy, Prannoy L, 1988. "Mis-specification in Farm Productivity Analysis: The Role of Land Quality," Oxford Economic Papers, Oxford University Press, vol. 40(1), pages 55-73, March.
  8. Amartya K. Sen, 1966. "Peasants and Dualism with or without Surplus Labor," Journal of Political Economy, University of Chicago Press, vol. 74, pages 425.
  9. Carter, Michael R, 1984. "Identification of the Inverse Relationship between Farm Size and Productivity: An Empirical Analysis of Peasant Agricultural Production," Oxford Economic Papers, Oxford University Press, vol. 36(1), pages 131-45, March.
  10. Feder, Gershon, 1985. "The relation between farm size and farm productivity : The role of family labor, supervision and credit constraints," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 297-313, August.
  11. 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.
  12. Benjamin, Dwayne, 1995. "Can unobserved land quality explain the inverse productivity relationship?," Journal of Development Economics, Elsevier, vol. 46(1), pages 51-84, February.
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