Family Organization, Retirement and Sectoral Employment in Developing Agricultural Economies

This paper studies the impact of family structures and elders' participation status on sectoral labor allocation in developing agricultural economies. In an overlapping generations framework with adult and old agents, we model a landlord's decision to hire adult apprentices and elder unskilled labor to farm under his supervision and/or to award sharecropping contracts to skilled (i.e. trained) elders only. Each landless individual can pool resources within an extended family, such that the old agent guarantees subsistence consumption to his unemployed dependent but takes a share of the adult's wage if the latter is employed. We derive sectoral employment implications for both the extended and the nuclear family organizations of exogenous changes in technology, population, land and intra-family distribution, for the cases where $i^0$ the elders are allowed to participate in the market for unskilled labor, and $ii^0$ elders are retired from that market. We find that the family structure influences the complementarity and substitutability of skilled and unskilled employment. In particular, while the nuclear family implies that skilled and unskilled labor are usually treated as substitutes, the extended family yields sufficient conditions for skilled {\sl and} unskilled labor increases or reductions, following exogenous changes in the model's technological and distributional parameters.