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

Author

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

Abstract

A large national farm panel from India covering a quarter century (1982, 1999, and 2008) is used to show that the inverse farm size-yield relationship weakened significantly over time, despite an increase in the dispersion of farm sizes. Key reasons are substitution of capital for labor in response to nonagricultural labor demand. Family labor was more efficient than hired labor in 1982-99, but not in 1999?2008. 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 W. & 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," Policy Research Working Paper Series 7783, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7783
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    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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