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Poverty decline, agricultural wages, and non-farm employment in rural India : 1983-2004

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  • Lanjouw, Peter
  • Murgai, Rinku

Abstract

The authors analyze five rounds of National Sample Survey data covering 1983, 1987/8, 1993/4, 1999/0, and 2004/5 to explore the relationship between rural diversification and poverty. Poverty in rural India declined at a modest rate during this period. The authors provide region-level estimates that illustrate considerable geographic heterogeneity in this progress. Poverty estimates correlate well with region-level data on changes in agricultural wage rates. Agricultural labor remains the preserve of the uneducated and also to a large extent of the scheduled castes and scheduled tribes. Although agricultural labor grew as a share of total economic activity over the first four rounds, it had fallen back to the levels observed at the beginning of the survey period by 2004. This all-India trajectory masks widely varying trends across states. During this period, the rural non-farm sector grew modestly, mainly between the last two survey rounds. Regular non-farm employment remains largely associated with education levels and social status that are rare among the poor. However, casual labor and self-employment in the non-farm sector reveal greater involvement by disadvantaged groups in 2004 than in the preceding rounds. The implication for poverty is not immediately clear - the poor may be pushed into low-return casual non-farm activities due to lack of opportunities in the agricultural sector rather than being pulled by high returns offered by the non-farm sector. Econometric estimates reveal that expansion of the non-farm sector is associated with falling poverty via two routes: a direct impact on poverty that is likely due to a pro-poor marginal incidence of non-farm employment expansion; and an indirect impact attributable to the positive effect of non-farm employment growth on agricultural wages. The analysis also confirms the important contribution to rural poverty reduction from agricultural productivity, availability of land, and consumption levels in proximate urban areas.

Suggested Citation

  • 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.
  • Handle: RePEc:wbk:wbrwps:4858
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    References listed on IDEAS

    as
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    Cited by:

    1. Christiaensen, Luc & Pan,Lei & Wang, Sangui, 2010. "Drivers of Poverty Reduction in Lagging Regions: Evidence from Rural Western China," WIDER Working Paper Series 035, World Institute for Development Economic Research (UNU-WIDER).
    2. Nidhiya Menon & Yana van der Meulen Rodgers, 2011. "How Access to Credit Affects Self-employment: Differences by Gender during India's Rural Banking Reform," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 48-69.
    3. repec:spr:agfoec:v:6:y:2018:i:1:d:10.1186_s40100-018-0098-0 is not listed on IDEAS
    4. repec:pal:eurjdr:v:29:y:2017:i:2:d:10.1057_s41287-016-0011-1 is not listed on IDEAS
    5. Ira N. Gang & Kunal Sen & Myeong-Su Yun, 2017. "Is Caste Destiny? Occupational Diversification among Dalits in Rural India," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(2), pages 476-492, April.
    6. Klonner, Stefan & Oldiges , Christian, 2014. "Safety Net for India's Poor or Waste of Public Funds? Poverty and Welfare in the Wake of the World's Largest Job Guarantee Program," Working Papers 0564, University of Heidelberg, Department of Economics.
    7. Aradhna Aggarwal & Nagesh Kumar, 2012. "Structural Change, Industrialization and Poverty Reduction: The Case of India," Development Papers 1206, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) South and South-West Asia Office.
    8. Christiaensen, Luc & Todo, Yasuyuki, 2014. "Poverty Reduction During the Rural–Urban Transformation – The Role of the Missing Middle," World Development, Elsevier, vol. 63(C), pages 43-58.
    9. Hoang, Trung X. & Pham, Cong S. & Ulubaşoğlu, Mehmet A., 2014. "Non-Farm Activity, Household Expenditure, and Poverty Reduction in Rural Vietnam: 2002–2008," World Development, Elsevier, vol. 64(C), pages 554-568.
    10. Emran, Shahe & Shilpi, Forhad, 2014. "Agricultural productivity, hired labor, wages and poverty : evidence from Bangladesh," Policy Research Working Paper Series 7056, The World Bank.
    11. Pieters, Janneke, 2010. "Growth and Inequality in India: Analysis of an Extended Social Accounting Matrix," World Development, Elsevier, vol. 38(3), pages 270-281, March.
    12. Atamanov, Aziz & Van den Berg, Marrit, 2012. "Determinants of the rural nonfarm economy in Tajikistan," MERIT Working Papers 080, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Ojimba, Thankgod Peter, 1. "Socio-Demographic Factors As Determinants Of Poverty In Crude Oil Polluted Crop Farms In Rivers State, Nigeria," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 1.
    14. Dutta, Sujoy, 2015. "An uneven path to accountability: A comparative study of MGNREGA in two states of India," Discussion Papers, Inequality and Social Policy SP I 2015-201, Social Science Research Center Berlin (WZB).
    15. Asadullah, M. Niaz & Yalonetzky, Gaston, 2012. "Inequality of Educational Opportunity in India: Changes Over Time and Across States," World Development, Elsevier, vol. 40(6), pages 1151-1163.
    16. Mark R. Rosenzweig & Andrew D. Foster, 2010. "Is There Surplus Labor in Rural India?," Working Papers 991, Economic Growth Center, Yale University.
    17. Emran, M. Shahe & Shilpi, Forhad, 2017. "Beyond Dualism: Agricultural Productivity, Small Towns, and Structural Change in Bangladesh," MPRA Paper 75938, University Library of Munich, Germany.
    18. Benjamin Davis & Paul Winters & Thomas Reardon & Kostas Stamoulis, 2009. "Rural nonfarm employment and farming: household-level linkages," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 119-123, March.
    19. Bachewe, Fantu Nisrane & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu Seyoum, 2016. "Non-farm income and labor markets in rural Ethiopia," ESSP working papers 90, International Food Policy Research Institute (IFPRI).
    20. Ashima Goyal & Akash Kumar Baikar, 2014. "Psychology, Cyclicality or Social Programs: Rural Wage and Inflation Dynamics in India," Working Papers id:5812, eSocialSciences.
    21. Magnus Hatlebakk, 2014. "Poverty Dynamics in Rural Orissa: Transitions in Assets and Occupations over Generations," Journal of Development Studies, Taylor & Francis Journals, vol. 50(6), pages 877-893, June.
    22. repec:eee:wdevel:v:103:y:2018:i:c:p:239-254 is not listed on IDEAS
    23. Basu, Kaushik, 2013. "Shared prosperity and the mitigation of poverty : in practice and in precept," Policy Research Working Paper Series 6700, The World Bank.
    24. Nidhiya Menon & Yana van der Meulen Rodgers, 2013. "Credit and self-employment," Chapters,in: Handbook of Research on Gender and Economic Life, chapter 22, pages 359-377 Edward Elgar Publishing.

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    Keywords

    Rural Poverty Reduction; Labor Markets; Labor Policies; Crops&Crop Management Systems;

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