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Agricultural productivity, hired labor, wages and poverty : evidence from Bangladesh

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  • Emran, Shahe
  • Shilpi, Forhad

Abstract

This paper provides evidence on the effects of agricultural productivity on wage rates, labor supply to market oriented activities, and labor allocation between own farming and wage labor in agriculture. To guide the empirical work, this paper develops a general equilibrium model that underscores the role of reallocation of family labor engaged in the production of non-marketed services at home (`home production'). The model predicts positive effects of a favorable agricultural productivity shock on wages and income, but the effect on hired labor is ambiguous; it depends on the strength of reallocation of labor from home to market production by labor surplus and deficit households. Taking rainfall variations as a measure of shock to agricultural productivity, and using subdistrict level panel data from Bangladesh, this paper finds significant positive effects of a favorable rainfall shock on agricultural wages, labor supply to market work, and per capita household expenditure. The share of hired labor in contrast declines substantially in response to a favorable productivity shock, which is consistent with a case where labor-deficit households respond more than the labor-surplus ones in reallocating labor from home production.

Suggested Citation

  • Emran, Shahe & Shilpi, Forhad, 2014. "Agricultural productivity, hired labor, wages and poverty : evidence from Bangladesh," Policy Research Working Paper Series 7056, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7056
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    2. Robert C. M. Beyer & Konstantin M. Wacker, 2024. "Good enough for outstanding growth: The experience of Bangladesh in comparative perspective," Development Policy Review, Overseas Development Institute, vol. 42(2), March.
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    6. Saha, Koustuv & Gulati, Kajal, 2024. "Agricultural Mechanization and Gendered Structural Transformation in India," 2024 Annual Meeting, July 28-30, New Orleans, LA 343578, Agricultural and Applied Economics Association.
    7. Sayeda Sabrina Ali & Md. Raju Ahmad & Jalal Uddin Mohammad Shoaib & Mohammad Aliuzzaman Sheik & Mohammad Imam Hoshain & Rebecca L. Hall & Katrina A. Macintosh & Paul N. Williams, 2021. "Pandemic or Environmental Socio-Economic Stressors Which Have Greater Impact on Food Security in the Barishal Division of Bangladesh: Initial Perspectives from Agricultural Officers and Farmers," Sustainability, MDPI, vol. 13(10), pages 1-22, May.
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    9. Maria Luz L. Malabayabas & Ashok K. Mishra & Joaquin Mayorga, 2024. "Impact of spouses' access to financial services on technological and managerial gaps in rice production," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(5), pages 2430-2456, July.
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    More about this item

    Keywords

    Labor Policies; Labor Markets; Economic Theory&Research; Markets and Market Access; Rural Poverty Reduction;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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