Nominal Wage Rigidity in Village Labor Markets

Kaur, Supreet

doi:10.1257/aer.20141625

Cited by 165 publications

(136 citation statements)

References 65 publications

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“…According to the preferred third specification, the elasticity of earnings with respect to prices is estimated to be 5 percent in rural areas and 18 percent in urban areas. The lower responsiveness in rural areas is consistent with the results documented by Kaur () and Dreze and Mukherjee (), which show that rural wages in India tend to be rigid and do not adjust fully to the shocks in the market conditions.…”

Section: Household Welfare and Trade Restrictivenesssupporting

confidence: 89%

Inequality and Trade Policy: The Pro‐Poor Bias of Contemporary Trade Restrictions

Marchand

2019

Review of Income and Wealth

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This paper studies the pro-poor bias of trade policy in India by estimating the household welfare effects of removing the current protection structure. The elimination of a pro-poor trade policy is expected to have a negative differential welfare effect at the low end of the distribution. The paper first constructs trade restrictiveness indexes for household consumption items and industries using both tariffs and non-tariff barriers. The results indicate that Indian trade policy is regressive through the expenditure channel as it disproportionately raises the cost of consumption for poorer households, while it is progressive through the earnings channel. Based on the net welfare effects, the elimination of the current trade protection structure is estimated to reduce inequality. These results indicate that a trade policy that is progressive through the earnings channel may induce a price effect that is regressive through the expenditure channel.JEL Codes: D31, F14, I30, O12

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Section: Household Welfare and Trade Restrictivenesssupporting

confidence: 89%

Inequality and Trade Policy: The Pro‐Poor Bias of Contemporary Trade Restrictions

Marchand

2019

Review of Income and Wealth

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“…I discuss how I attempt to isolate the insurance effect in Section 4. employment is the dominant source of employment, and, as shown by Jayachandran (2006), wages severely fluctuate with covariate shocks. In the case of major weather shocks, farmers have to expect to not find any employment at all (Kaur, 2014). Such wage fluctuations severely limit households' possibilities to cope with shocks through the labor market.…”

Section: Risk Management and Households' Crop Choices: A Theoretical mentioning

confidence: 99%

An Employment Guarantee as Risk Insurance? Assessing the Effects of the NREGS on Agricultural Production Decisions

Gehrke

2019

The World Bank Economic Review

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Uninsured risk constrains households in their production decisions in many developing countries. Similarly to crop insurance, employment guarantees can support farmers in managing agricultural production risks. Evidence from representative panel data of Andhra Pradesh, India, suggests that the National Rural Employment Guarantee Scheme (NREGS) reduces households’ uncertainty about future income streams because it provides employment opportunities in rural areas independently of weather shocks and crop failure. Therewith the NREGS makes an ex-post labor supply response to agricultural shocks more efficient. Households with access to the NREGS are found to shift their production toward riskier but also more profitable crops. The observed shifts in agricultural production do considerably raise the profitability of agricultural production and hence the incomes of smallholder farmers. The findings are not driven by changes in the labor or cost intensity of those crops, which supports the idea that the causal mechanism underlying the observed changes is indeed an insurance effect.

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“…Lewis 1954) presumed. This paper therefore contributes to the literature on the functioning of labor markets in developing countries (Rosenzweig 1980, Benjamin 1992, Jayachandran 2006, Kaur 2015. Second, our results should encourage policymakers to re-think the various restrictions to internal mobility they have instituted under the guise of rural development policy (Oberai 1983).…”

Section: Introductionmentioning

confidence: 55%

Effects of Emigration on Rural Labor Markets

Akram¹,

Chowdhury²,

Mobarak³

2017

AEA Randomized Controlled Trials

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Rural to urban migration is an integral part of the development process, but there is little evidence on how out-migration transforms rural labor markets. Emigration could benefit landless village residents by reducing labor competition, or conversely, reduce productivity if skilled workers leave. We offer to subsidize transport costs for 5792 potential seasonal migrants in Bangladesh, randomly varying saturation of offers across 133 villages. The transport subsidies increase beneficiaries' income due to better employment opportunities in the city, and also generate the following spillovers: (a) A higher density of offers increases the individual take-up rate, and induces those connected to offered recipients to also migrate. The village emigration rate increases from 35% to 65%. (b) This increases the male agricultural wage rate in the village by 4.5-6.6%, and the available work hours in the village by 11-14%, which combine to increase income earned in the village, (c) There is no intra-household substitution in labor supply, but primary workers within households earn more during weeks in which many of their village coresidents moved away. (d) The wage bill for agricultural employers increases, which reduces their profit, with no significant change in yield. (e) Food prices increase by 2.7% on net, driven by an increase in the price of (fish) protein, and offset by (f) a decrease in the price of non-tradables like prepared food and tea. Seasonal migration subsidies not only generate large direct benefits, but also indirect spillover benefits by creating slack in the village-of-origin labor market during the lean season.

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Nominal Wage Rigidity in Village Labor Markets

Cited by 165 publications

References 65 publications

Inequality and Trade Policy: The Pro‐Poor Bias of Contemporary Trade Restrictions

Inequality and Trade Policy: The Pro‐Poor Bias of Contemporary Trade Restrictions

An Employment Guarantee as Risk Insurance? Assessing the Effects of the NREGS on Agricultural Production Decisions

Effects of Emigration on Rural Labor Markets

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