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Can labor market imperfections explain changes in the inverse farm size-productivity relationship?: Longitudinal evidence from rural India:

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

Abstract

To understand whether and how inverse relationship between farm size and productivity changes when labor market performance improves, we use large national farm panel from India covering a quarter-century (1982, 1999, 2008) to show that the inverserelationship weakened significantly over time, despite an increase in the dispersion of farm sizes. A key reason was the substitution of capital for labor in response to nonagricultural labor demand. In addition, family labor wasmore efficient than hired labor in the 1982–1999 period, but not during the 1999–2008period.In line with labor market imperfections as a key factor, separability of labor supply and demand decisions cannot be rejected in the second period,except in villages with very low nonagricultural labor demand.

Suggested Citation

  • Deininger, Klaus & Jin, Songqing & Liu, Yanyan & Singh, Sudhir K., 2016. "Can labor market imperfections explain changes in the inverse farm size-productivity relationship?: Longitudinal evidence from rural India:," IFPRI discussion papers 1538, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:ifprid:1538
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    Cited by:

    1. Steven Helfand & Matthew Taylor, 2018. "The Inverse Relationship between Farm Size and Productivity: Refocusing the Debate," Working Papers 201811, University of California at Riverside, Department of Economics.
    2. Rada, Nicholas E. & Fuglie, Keith O., 2019. "New perspectives on farm size and productivity," Food Policy, Elsevier, vol. 84(C), pages 147-152.
    3. Yao, Ling & Chen, Qihui & Wu, Laping, 2018. "Heterogeneous supply response: Does high price expectation attenuate the inverse farm size-productivity relationship in China?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274363, Agricultural and Applied Economics Association.
    4. Wineman, Ayala & Jayne, Thomas S., 2017. "Factor Market Activity And The Inverse Farm Sizeproductivity Relationship In Tanzania," Feed the Future Innovation Lab for Food Security Policy Research Papers 265405, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    5. S. Mahendra Dev, 2018. "Tranformation of Indian agriculture: Growth, iclusiveness and sustainability," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2018-026, Indira Gandhi Institute of Development Research, Mumbai, India.

    More about this item

    Keywords

    farm size; farm structure; productivity; agricultural development; labor; markets;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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