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Is There Surplus Labor in Rural India?

Author

Listed:
  • Mark R. Rosenzweig

    (Department of Economics, Yale University)

  • Andrew D. Foster

    (Department of Economics, Brown University)

Abstract
We show empirically using panel data at the plot and farm level and based on a model incorporating supervision costs, risk, credit-market imperfections and scale-economies associated with mechanization that small-scale farming is inefficient in India. Larger farms are more profitable per acre, more mechanized, less constrained in input use after bad shocks, and employ less per-acre labor than small farms. Based on our structural estimates of the effects of farm size on labor use and the distribution of Indian landholdings, we estimate that over 20% of the Indian agricultural labor force is surplus if minimum farm scale is 20 acres.

Suggested Citation

  • Mark R. Rosenzweig & Andrew D. Foster, 2010. "Is There Surplus Labor in Rural India?," Working Papers 991, Economic Growth Center, Yale University.
    • Handle: RePEc:egc:wpaper:991
    as

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    File URL: http://www.econ.yale.edu/growth_pdf/cdp991.pdf
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    References listed on IDEAS

    as
    1. Rosenzweig, Mark R., 1988. "Labor markets in low-income countries," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 15, pages 713-762, Elsevier.
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    4. Rosenzweig, Mark R & Binswanger, Hans P, 1993. "Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments," Economic Journal, Royal Economic Society, vol. 103(416), pages 56-78, January.
    5. Bhalla, Surjit S. & Das, Tirthatanmoy, 2006. "Pre-and Post-Reform: India: A Revised Look at Employment, Wages and Inequality," India Policy Forum, National Council of Applied Economic Research, vol. 2(1), pages 183-254.
    6. Benjamin, Dwayne, 1995. "Can unobserved land quality explain the inverse productivity relationship?," Journal of Development Economics, Elsevier, vol. 46(1), pages 51-84, February.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    agriculture; India; scale; profits; labor; tractors;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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