Agricultural Productivity, Hired Labor, Wages and Poverty : Evidence from Bangladesh

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.

Bibliographic Details

Main Authors:	Emran, Shahe, Shilpi, Forhad
Format:	Publications & Research biblioteca
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014-10
Subjects:	ACCESS TO MARKETS, ACCOUNTING, ACTIVE LABOR, AGRICULTURAL DEVELOPMENT, AGRICULTURAL EMPLOYMENT, AGRICULTURAL GROWTH, AGRICULTURAL LAND, AGRICULTURAL PRODUCTION, AGRICULTURAL PRODUCTIVITY, AGRICULTURAL PRODUCTIVITY GROWTH, AGRICULTURAL SECTOR, AGRICULTURAL WAGE, AGRICULTURAL WAGES, AGRICULTURAL YIELDS, AGRICULTURE, CD, CLIMATE CHANGE, COMMODITY PRICE, CONSTANT RETURNS TO SCALE, CROP SCIENTISTS, CROP YIELD, DEMAND CURVE, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DIMINISHING RETURNS, ECONOMETRIC ANALYSIS, ECONOMIC GROWTH, ECONOMICS, ELASTICITY, EMPLOYMENT, EMPLOYMENT IN AGRICULTURE, EMPLOYMENT OPPORTUNITIES, EXCLUSION RESTRICTION, EXPANSION OF IRRIGATION, EXPENDITURE, FAMILY LABOR, FARM ACTIVITIES, FARM PRODUCTION, FIRING COSTS, FOOD OUTPUT, FOOD PRODUCTION, GDP, GENERAL EQUILIBRIUM, GROWTH RATE, HOUSEHOLD CONSUMPTION, HOUSEHOLD INCOME, HOUSEHOLD SURVEYS, HOUSEHOLD WELFARE, HUMAN CAPITAL, INCIDENCE OF POVERTY, INCOME, INCOME GAINS, INDUSTRIALIZATION, INTERNATIONAL MARKET, IRRIGATION, IRRIGATION EXPANSION, LABOR ALLOCATION, LABOR DEMAND, LABOR FORCE, LABOR MARKET, LABOR MARKET INDICATORS, LABOR MARKET OUTCOMES, LABOR MARKET RIGIDITY, LABOR MARKETS, LABOR REALLOCATION, LABOR SUPPLY, LABORERS, MACROECONOMIC SHOCKS, MARKET INTEGRATION, MARKET WAGE, MARKETING, NON-FARM EMPLOYMENT, NON-FARM SECTOR, NORMAL GOOD, OPPORTUNITY COST, PER CAPITA CONSUMPTION, POLITICAL ECONOMY, POOR, POOR HOUSEHOLDS, POOR PEOPLE, POOR RURAL HOUSEHOLDS, POSITIVE EFFECTS, POVERTY IMPACT, POVERTY INCIDENCE, POVERTY REDUCTION, PRICE CHANGES, PRODUCTION FUNCTION, PRODUCTION POSSIBILITY CURVE, PRODUCTIVE ASSETS, PRODUCTIVITY, PRODUCTIVITY GROWTH, PRODUCTIVITY INCREASE, PRODUCTIVITY INCREASES, REAL WAGE, RETURNS TO SCALE, RURAL, RURAL AREAS, RURAL DEVELOPMENT, RURAL ECONOMY, RURAL INEQUALITY, RURAL LABOR, RURAL LABOR MARKET, RURAL LABOR MARKETS, RURAL POVERTY, RURAL TOWNS, RURAL WAGES, SELF EMPLOYMENT, SKILLED LABOR, STRUCTURAL CHANGE, SUBSTITUTE, SUBSTITUTION, SUPPLY CURVE, SUPPLY ELASTICITY, SUPPLY FUNCTION, SURPLUS, SURPLUS LABOR, TOTAL EMPLOYMENT, TOTAL FACTOR PRODUCTIVITY, UNEMPLOYED, UNEMPLOYMENT, UNSKILLED WORKERS, UTILITY FUNCTION, WAGE DATA, WAGE EMPLOYMENT, WAGE INCREASE, WAGE INCREASES, WAGE RATE, WAGE RATES, WAGES, WAR,
Online Access:	http://documents.worldbank.org/curated/en/2014/10/20270087/agricultural-productivity-hired-labor-wages-poverty-evidence-bangladesh http://hdl.handle.net/10986/20518
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