Asymmetric non-separation and rural labor markets

Dillon, Brian; Brummund, Peter; Mwabu, Germano

doi:10.1016/j.jdeveco.2018.12.008

Cited by 36 publications

(41 citation statements)

References 29 publications

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“…Model (8) expands equation 7by adding dummies for a lagged positive shock, Po s d,t−1 , for the cases where θ dt = θ Neg and θ dt = θ Zero . Thus, in order to enable separate tests of Propositions 1 and 2, the following specification breaks up the case of negative shocks into two subcases: (8) ln…”

Section: B Empirical Testsmentioning

confidence: 99%

“…Specifically, Pos ̃ d,t−k is a binary indicator that equals 1 if there was a positive shock t − k periods ago and no positive shock since then (i.e., from periods t − k + 1 to period t ), and equals 0 otherwise. 26 With these controls, the omitted shock category in model (8) is no shock this year, and non-positive shocks in the past K years. This means that there have been no upward perturbations in the past wage from high rainfall in earlier years.…”

Section: B Empirical Testsmentioning

confidence: 99%

“…However, Proposition 2 predicts that β 3 > 0 : wages could be higher than the omitted category of no shock, even though there is a negative shock in year t . 28 Finally, note that under the null of full adjustment, model (8) should reduce exactly to model (7): β 1 = α 1 > 0 ; β 2 = β 3 = α 2 < 0 ; and β 4 = 0 . Thus, equation 8will only have additional explanatory power if there are downward rigidities.…”

Section: B Empirical Testsmentioning

confidence: 99%

“…These findings are consistent with the prediction that labor rationing will lead to "disguised unemployment" and separation failures, with smaller farms using labor more intensively in production than larger farms (Singh, Squire, and Strauss 1986;Benjamin 1992). 8 Could the findings above be explained by factors other than nominal wage rigidity? There are two categories of potential concerns.…”

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confidence: 99%

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Nominal Wage Rigidity in Village Labor Markets

Kaur

2019

American Economic Review

165

118

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This paper develops a new approach to test for downward wage rigidity by examining transitory shocks to labor demand (i.e., rainfall) across 600 Indian districts. Nominal wages rise during positive shocks but do not fall during droughts. In addition, transitory positive shocks generate ratcheting: after they have dissipated, wages do not adjust back down. Ratcheting reduces employment by 9 percent, indicating that rigidities distort employment levels. Inflation, which is unaffected by local rainfall, enables downward real wage adjustments—offering causal evidence for its labor market effects. Surveys suggest that individuals believe nominal wage cuts are unfair and lead to effort reductions. (JEL E24, E31, J23, J31, O15, O18, R23)

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Section: B Empirical Testsmentioning

confidence: 99%

Section: B Empirical Testsmentioning

confidence: 99%

Section: B Empirical Testsmentioning

confidence: 99%

mentioning

confidence: 99%

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Nominal Wage Rigidity in Village Labor Markets

Kaur

2019

American Economic Review

165

118

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“…4 See for example Benjamin 1992;Dillon and Barrett 2017;Dillon et al 2019;Samphantharak and Townsend 2010; LaFave and Thomas 2016; Samphantharak and Townsend 2018, among others. 5 There is a growing literature in international trade studying the propagation of shocks through production networks in the aftermath of natural disasters (Barrot and Sauvagnat, 2016;Carvalho et al, 2016), trade shocks (Tintelnot et al, 2018;Huneeus, 2019), and sectoral or regional shocks (Caliendo et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

Insurance and Propagation in Village Networks

Kinnan¹,

Samphantharak²,

Townsend³

et al. 2019

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The intra-household linkages that comprise networks in village economies serve the important role of providing insurance. However, the flip side of these linkages is that they also propagate shocks. We show that when one household experiences a significant health shock, it propagates to other linked households via the village network. Because the shocked household is imperfectly insured, it adjusts production decisions-drawing down working capital, cutting input spending, and reducing labor hiring-hence affecting households who supply inputs and labor to them. We find that upstream businesses close to shocked households in the supply chain network experience reduced local sales and increased inventories. Likewise, workers closer to the shocked households in the labor network have lower probability of working locally and reduced earnings. Networks appear to be rigid, at least in the short run; linked households are unable to form new linkages when existing links experience negative shocks. A simple back of the envelope exercise suggests that the total indirect costs may be as large or larger than the direct costs. These results suggest that social (village-level) gains from expanding health insurance may be substantially higher than private (household-level) gains.

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Tests for market failures and overcoming transaction costs barriers to market participation in Afghanistan

Ahmadzai

2024

J. Soc. Econ. Dev.

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Similar to other fragile poor countries, the majority of the rural population in Afghanistan depend directly or indirectly on small-scale farming for their livelihoods, and poor infrastructure and other barriers restrict access to markets and services, making improving access to local input markets a significant challenge for policymakers aiming to increase productivity. This paper offers empirical evidence addressing two important issues for smallholder participation in input markets: are rural markets incomplete or failing and how do transaction costs affect participation in factor markets? Pooled cross-sectional data from three waves of nationally representative surveys between 2011 and 2016 with a sample of nearly 21,000 households are used. The analysis first tests and rejects the separability hypothesis that household production and consumption decisions are independent which can be interpreted as evidence of market failures. A control function approach with instrumental variables to address endogeneity is employed to estimate household input market participation decisions. Ownership of or access to information and communication technology and transport equipment are used as proxies for transaction costs. Results confirm that lower transaction costs increase input market participation and expenditure on inputs by farm households. Additionally, households with better access to roads and district or provincial market centres have higher market participation and expenditure on input. Reducing transaction costs plays an important role in input use, potentially increasing productivity and incomes.

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Asymmetric non-separation and rural labor markets

Cited by 36 publications

References 29 publications

Nominal Wage Rigidity in Village Labor Markets

Nominal Wage Rigidity in Village Labor Markets

Insurance and Propagation in Village Networks

Tests for market failures and overcoming transaction costs barriers to market participation in Afghanistan

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