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Can Labor-Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship? Longitudinal Evidence from Rural India

Author

Listed:
  • Klaus Deininger
  • Songqing Jin
  • Yanyan Liu
  • Sudhir K. Singh
Abstract
We use a large national farm panel from India from 1982 to 2008 to show that the inverse relationship between farm size and output per unit of land weakened significantly over time. A key reason was the substitution of capital for labor in response to nonagricultural labor demand. In addition, family labor was more efficient than hired labor in 1982 and 1999, but not in 2008. In line with labor market imperfections as a key factor, separability of labor supply and demand decisions cannot be rejected in the last period, except in villages with very low nonagricultural labor demand.

Suggested Citation

  • Klaus Deininger & Songqing Jin & Yanyan Liu & Sudhir K. Singh, 2018. "Can Labor-Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship? Longitudinal Evidence from Rural India," Land Economics, University of Wisconsin Press, vol. 94(2), pages 239-258.
    • Handle: RePEc:uwp:landec:v:94:y:2018:i:2:p:239-258
    Note: DOI: 10.3368/le.94.2.239
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    6. S. Mahendra Dev, 2018. "Tranformation of Indian agriculture: Growth, iclusiveness and sustainability," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2018-026, Indira Gandhi Institute of Development Research, Mumbai, India.
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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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