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Seasonality and Wage Responsiveness in a Developing Agrarian Economy

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  • Sunil Kanwar

Abstract

This paper studies the wage responsiveness of labour supply and demand, simultaneously addressing the twin issues of the non‐clearing of developing rural labour markets and seasonality. It employs a data set pertaining to south‐central India, and limits itself to the agricultural market for daily‐rated labour (by far the predominant form of wage contract in the sample villages). Estimating a theoretically robust and empirically justified disequilibrium model of the agricultural labour market, we find no evidence of backward‐bending supply curves or ‘vertical’ demand curves, contrary to findings in the literature. Further, while the agricultural labour market appears to be in equilibrium during the kharif (or rainy) season, it manifests excess supply in the rabi (or post‐rainy) season.

Suggested Citation

  • Sunil Kanwar, 2004. "Seasonality and Wage Responsiveness in a Developing Agrarian Economy," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(2), pages 189-204, May.
    • Handle: RePEc:bla:obuest:v:66:y:2004:i:2:p:189-204
    DOI: 10.1046/j.0305-9049.2003.00098.x
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    1. Skoufias, Emmanuel, 1993. "Labor market opportunities and intrafamily time allocation in rural households in South Asia," Journal of Development Economics, Elsevier, vol. 40(2), pages 277-310, April.
    2. Mark R. Rosenzweig, 1980. "Neoclassical Theory and the Optimizing Peasant: An Econometric Analysis of Market Family Labor Supply in a Developing Country," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(1), pages 31-55.
    3. Emmanuel Skoufias, 1993. "Seasonal Labor Utilization in Agriculture: Theory and Evidence from Agrarian Households in India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 20-32.
    4. Fair, Ray C & Jaffee, Dwight M, 1972. "Methods of Estimation for Markets in Disequilibrium," Econometrica, Econometric Society, vol. 40(3), pages 497-514, May.
    5. Bardhan, Pranab K, 1979. "Labor Supply Functions in a Poor Agrarian Economy," American Economic Review, American Economic Association, vol. 69(1), pages 73-83, March.
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    Cited by:

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    3. Feuerbacher, Arndt & Grethe, Harald, 2017. "Incorporating seasonality of labour markets in a general equilibrium framework," Conference papers 332823, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Wodon, Quentin & Beegle, Kathleen, 2006. "Labor Shortages Despite Underemployment? Seasonality in Time Use in Malawi," MPRA Paper 11083, University Library of Munich, Germany.
    5. Murgai, Rinku & Ravallion, Martin, 2005. "Is a guaranteed living wage a good anti-poverty policy?," Policy Research Working Paper Series 3640, The World Bank.

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