a framework for the analysis of evolving patron client ties in agrarian economies abstract this paper looks systematically at the various factors that can account for the disappearance or the transformation of the institution of patronage that used to structure labor and other relationships in many agrarian societies of the past it is an attempt to offer a unifying framework capable of guiding one s attention to the relevant variables and to the way they interact in this process the rather simplistic view according to which there is a unique linear path through which patronage evolves is called into question and a number of different scenarios are instead presented these alternatives are illustrated with reference to asia

a limited dependent analysis of the choice of regular labour contract in seasonal agriculture the paper examines both theoretically and empirically the factors determining the demand for regular labour in seasonal agriculture in an implicit contract framework it is argued that there are hoarding costs of regular labour in the slack period when there is not much work to be done consequently the number of regular labour employed is constrained by the hoarding cost where larger employment intensive farms tend to hire more regular labour evidence from the icrisat villages in india too show that though the marginal costs of regular labour are zero there are significant hoarding costs of regular labour among small farms so that larger farmers are the major demanders of regular labour estimates of the double hurdle model jointly determining the probability of hiring regular labour and demand for regular labour hours if a regular labour is hired are shown to be an improvement over univariate tobit estimates of the demand for regular labour hours only

ex ante and ex post labor supply response to risk in a low income area abstract this paper tests for ex ante and ex post labor supply responses to weather risk for rural indian farm households the analysis uses panel data on 2115 households spanning 13 states in rural india merged with a 22 year series of district level rainfall data ex ante households facing riskier distributions of rainfall are more likely to participate in the labor market ex post unexpectedly bad weather and low rainfall increase labor force participation

bargaining power and enforcement in credit markets abstract in a credit market with enforcement constraints we study the effects of a change in the outside options of a potential defaulter on the terms of the credit contract as well as on borrower payoffs the results crucially depend on the allocation of bargaining power between the borrower and the lender we prove that there is a crucial threshold of relative weights such that if the borrower has power that exceeds this threshold her expected utility must go up whenever her outside options come down but if the borrower has less power than this threshold her expected payoff must come down with her outside options in the former case a deterioration in outside options brought about say by better enforcement must create a lorenz improvement in state contingent consumption in particular borrower consumption rises in all bad states in which loans are taken in the latter case in contrast the borrower s consumption must decline at least for all the bad states these disparate findings within a single model permit us to interpret existing literature on credit markets in a unified way

labor tying in a poor agrarian economy a theoretical and empirical analysis in this paper we show how tied labor contrary to its common characterization as a feudal relic and as a symptom of economic stagnation may actually be strengthened by capitalist agricultural development we construct a simple two period theoretical model of a two tiered labor market to show how the proportional importance of voluntary labor tying contracts may increase with yield increasing improvements and with a tightening of the labor market we then provide in support of these hypotheses some general historical as well as more detailed econometric evidence from a variety of cross sectional data in rural india

internal migration and urban employment in the third world for more than a decade michael todaros model has provided a widely accepted theoretical framework for explaining the massive flows of rural urban migration that are observed in many third world countries this paper however presents data amassed from a wide range of countries to highlight a crucial shortcoming of that model it will be shown that far from being general in nature the todaro approach is limited to explaining the movement of persons possessed of sufficient human capital to qualify them for modern sector employment the present work utilizes the perspective of the urban subsistence sector to develop a model that serves as a useful complement to that of todaro excerpt

a note on strategyproofness in edgeworth box economies abstract this paper considers the problem of dividing a bundle of two private goods between two agents whose preferences are continuous convex and strictly increasing it is shown that every strategyproof scheme that is continuous in the preferences must let one agent choose his best bundle from some exogenous set

efficiency and equity tradeoffs incentive compatible contracts revisited abstract while the efficiency of certain contractual choices has been well established less attention has been given to the distributional outcomes of contracting in natural resource based industries data from a case study of seed gatherers in honduras demonstrates that workers paid under a relative payment system receive an earnings premium of about 25 of which 40 cannot be explained by observed differences in worker productivity a theoretical agency model is outlined in the appendix to explain why workers under tournaments necessarily enjoy a higher return than those under piece rates implying a more skewed income distribution as suggested in the efficiency wage literature

consumption efficiency and surplus labour abstract if 1 there is a long term relationship between consumption and labour efficiency 2 long employment contracts are possible and 3 production is seasonal a trade off emerges between positive effects of permanent contracts on productivity and the costly seasonal idleness of permanent labour possible outcomes include 1 co existence of casual and permanent contracts with number of workers affecting proportion of permanent to temporary employees but not output classical disguised unemployment 2 exclusively casual employment with output negatively related to workforce leibenstein mazumdar surplus labour and 3 permanent contracts only with open unemployment and a positive relationship between number employed and output the mirrlees bliss stern stiglitz solution conditions are derived for each solution

self employment and self selection in developing country labor markets labor markets in less developed countries ldcs have traditionally been characterized as non competitive this view is expressed in well known models in the development economics literature for example the labor surplus model of lewis 16 asserts that labor in rural areas of ldcs in early stages of development is so abundant that if the wage rate were determined competitively it would be below the subsistence level hence institutions are assumed to arise to determine the wage rate non competitively and to provide the resulting excess supply of labor to agriculture with a subsistence level of living the harristodaro 11 model of rural urban migration asserts that labor unions minimum wage laws public sector hiring practices and other institutional factors tend to keep formal sector wages in urban areas above labor market clearing levels the resulting excess supply of labor in urban areas is assumed to survive at a subsistence level by becoming selfemployed in the low productivity informal sector recent empirical studies provide little support for the non competitive view of ldc labor markets evidence from india thailand malaysia kenya and guatemala suggests that labor markets are much less imperfect than often assumed an important empirical finding in several of these studies is that self employed workers appear to have higher earnings than their wage employee counterparts in urban areas 2 this fact is inconsistent with the notion that self employment is typically a low productivity occupation engaged in by individuals who are searching for scarce well paying formal sector jobs the purpose of this study is to analyze and estimate a model of individual choice between wage and self employment in the ldc context the model incorporates a production function in the self employment sector that includes managerial ability as an input analysis of the influence of managerial ability on the choice of self employment leads to a theory that can explain the observed pattern of earnings of the urban self employed compared to wage employees implications of the model for estimation of production function

internal migration and urban employment comment recently in this journal william e cole and richard d sanders 1985 criticized the todaro migration model and offered a different approach a lively and interesting debate followed but the cole and sanders cs model was not actually solved indeed michael todaro suggested that the model yielded no unique algebraic solution a charge to which cs did not respond this one page note identifies the changes needed to provide closure of the cs model excerpt

recruitment restrictions and labor markets evidence from the postbellum u s south this article studies the effect of recruitment restrictions on mobility and wages in the postbellum u s south i estimate the effects of criminal fines charged for enticement recruiting workers already under contract on sharecropper mobility tenancy choice and agricultural wages i find that a 13 10 increase in the enticement fine lowered the probability of a move by black sharecroppers by 12 daily wages by 1 cent 1 and the returns to experience for blacks by 0 6 per year these results are consistent with an on the job search model where the enticement fine raises the cost of recruiting an employed worker

oligopsonistic landlords segmented labor markets and the persistence of tied labor contracts this article examines contractual labor arrangements in agrarian economies that persist as a consequence of market power on the part of landlords faced with output uncertainty we show that a segmented labor market characterized by tied labor contracts and involuntary unemployment in the lean season are optimal as compared to a labor hiring arrangement that guarantees full employment of labor in both seasons government intervention in the form of a specific subsidy targeted toward the hiring of permanent laborers may raise the welfare of all laborers while a specific subsidy directed toward the hiring of casual laborers or the institution of relief programs that absorb the rural unemployed in the lean season leads to the casual laborers in the economy being worse off copyright 2002 oxford university press

permanent labour and land tenancy contracts in agrarian economies an integrated analysis extending the existing models of land and labour contracts this study attempts to build a general model of long term agrarian contracts the model implies that where tenancy is an available option the fixed wage permanent labour contract will not be chosen if it is chosen under institutional constraints on tenancy contracts resulting resource allocations will be inefficient empirical relevance of the model is tested on data from the philippines

targeting child labor in debt bondage evidence theory and policy implications despite recent multilateral efforts to single out child labor in debt bondage as one of the worst forms of child labor several important questions have yet to be addressed how pervasive is the phenomenon are there systematic correlations between the incidence of children in debt bondage and the economic legislative and financial development indicators of the economy how does an understanding of these correlates affect the way national and international policy measures aimed at targeting this form of child labor are perceived this article addresses each of these questions the empirical findings suggest strong correlation between the likelihood of the incidence of child labor in debt bondage with the stage of development of an economy the stage of financial development and enforcement of core labor rights building on this evidence the article presents a theoretical model that highlights the drawbacks and merits of a number of policies aimed at putting checks on child labor in debt bondage

rural labor legislation and permanent agricultural employment in northeastern brazil abstract permanent annual or longer term agricultural employment declined relative to temporary daily weekly or seasonal employment during the 1960s in a sugar cane producing region in northeastern brazil but increased rapidly during the 1970s predictions from economic theory are combined with observations about the economic forces at work during the period to argue that in the absence of government intervention permanent employment would likely have risen during both decades the argument renders the introduction of the brazilian rural labor statute rls of 1963 a strong candidate explanation for the decline of permanent employment in the 1960s the rls s employment stability provision which required employers to make severance payments to workers with at least one year tenure dismissed without just cause not only increased the expected cost of permanent contracts but also changed the very nature of permanent employment prior to the legislation employers induced permanent workers to be subject to them by giving them premium wage and benefits packages and threatening to dismiss them if caught shirking in subjection severance pay provisions made such threats incredible the elimination of farmers ability to derive subjection benefits from permanent employees reduced even further the incentive to hire workers under permanent contracts

income smoothing and consumption smoothing one way that risk averse households protect consumption levels is to borrow and use insurance mechanisms another way common in low income economies is to diversify economic activities and make conservative production and employment choices households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance typically both types of mechanisms are studied independently but much more can be learned by studying them together first we obtain a more complete picture of risks costs and insurance possibilities second it opens the way to considering biases in standard tests of credit and insurance

wage subsidies and distortionary taxes in a mobile capital harris todaro model in prescribing policy to eliminate or mitigate the effects of labour market distortions some form of wage subsidy is usually among the highest ranking options rarely is the source of revenues for these subsidies treated as an explicit issue this omission has special significance for the harris todaro h t model of the labour market since the policy most frequently recommended whether capital is sector specific or intersectorally mobile is an across the board wage subsidy 2 this effectively eliminates the possibility of taxing one subset of sectors rather than subsidizing its complement an option often favoured by those theorists who concern themselves with revenue considerations the next section of this paper sets forth the model of a small open h t economy with mobile capital that is the basis for this analysis section ii re examines three wage subsidies on manufacturing wages on agricultural wages or on both sectors assuming that resources for the subsidies are raised by an across the board tax on profits this is in the tradition of cordenfindlay and we replicate their results though stating them in more precise form so that we might have a standard for later comparison the subsequent sections examine the effects of these subsidies on unemployment and resource allocation if they are financed by a tax on profits in the manufacturing sector section iii or by import tariffs section iv owing to the second best nature of the h t model it will be demonstrated that taxes normally considered distortionary in their own right can be superior to an across the board tax if revenues are constrained and can be very useful instruments if it is the variety of policy tools that is limited section v concludes with a ranking of the various subsidy tax packages

does firm ownership structure matter evidence from sugar mills in india abstract this paper examines the effect of firm ownership structure on firm behavior and the economic outcomes of upstream suppliers by comparing privately owned sugar mills to cooperatives and public mills in india in this setting government support for cooperative and public mills allows meaningful variation in ownership structure to be observed while the command area zoning system whereby mills are given monopsony power to operate within an assigned area helps tackle the identification challenge the borders of command areas allow for a geographic regression discontinuity design where underlying soil weather and institutional characteristics are exactly the same but ownership structure changes across boundaries using satellite images overlaid on digital maps to measure sugarcane grown along the borders as well as a survey to determine the effects of crop choices on farmer welfare i find that private mills encourage sugarcane production greater cane cultivation is tied to better credit provided by private mills and it results in higher income and consumption for farmers

an oligopsonistic model of wage determination in agrarian societies the theory of rural wages in less developed countries is itself only partially developed three major explanations have been put forward but none of these can account for observed variations in nominal wages over time over regions and across individuals it is therefore time to take a fresh look at the problem and to develop new models which are more in accord with the data this task is undertaken in section ii where a model of heterogeneous labour is used to analyse rural labour markets and explain the wage payments system section i contains a brief summary of existing theory and its deficiencies in order to derive the main properties of the model quickly formal proofs of assertions are relegated to the technical appendix and most of the discussion of the assumptions and detailed explanations are left to section iii this section also contains general conclusions as well as a discussion of some of the more controversial issues

wage homestead tenancies technological dualism and tenant household size a widespread but little studied tenancy in the developing world entails the exchange of labor for access to a homestead and a wage this paper models two distinguishing features of this tenancy technological dualism between the landlord s and tenants plot and landlord preferences over tenant household size when wages are time denominated moral hazard may provide incentive for landlords to resist innovation on the homestead landlords are shown to prefer larger tenant households under a time wage than under piece rate i argue that landlord preferences over tenant household size may have important effects that are ignored in the literature

contract duration and investment incentives evidence from land tenancy agreements this paper analyzes the empirical determinants of contract length a key and yet neglected dimension of contractual structure i estimate contract length and contract type jointly using original data on tenancy agreements signed between 1870 and 1880 in the district of siracusa italy the findings indicate that the choice of contract length is driven by the need to provide incentives for nonobservable investment taking into account transaction costs and imperfections in the credit markets that make incentive provision costly the results also illustrate that because both length and the compensation scheme are used to provide incentives within the same contract joint analysis is important for a correct interpretation of the evidence jel d82 o12 q15

formal and informal institutions in the labor market with applications to the construction sector in egypt abstract urban labor markets that are characterized by the absence or ineffectiveness of regulation by legal and bureaucratic institutions can nonetheless be subject to powerful institutional forces based on customary norms group cohesion kinship and social networks using insights derived from the new institutional economics this argument is illustrated with three examples from the construction labor market in egypt where formal and informal institutions performing similar functions are contrasted in each case the informal institution is found to be significantly more important in shaping labor market relations

income guarantees and borrowing in risky environments evidence from india s rural employment guarantee scheme this paper investigates the effects of an income guarantee on borrowing in a risky setting with marked seasonality a three season infinite horizon model is developed in which the aims of smoothing consumption and maintaining creditworthiness are somewhat opposed and the seasonal timing of transfers matters if borrowing does not affect production then larger transfers concentrated in the lean season may well lead to a contraction of the total amount borrowed over the whole annual cycle if borrowing also finances working capital then larger transfers make riskier positions attractive and investment in working capital and total borrowing may both increase these insights are tested in the context of india s national rural employment guarantee scheme as implemented in upland odisha the potential endogeneity of participation is addressed by using the female reservation for local elections as an instrument each day s work reduces the estimated level of borrowing in the lean season by about the regulated wage in contrast the estimated effect on borrowing in the cultivation season by households owning at least the median holding is to increase it by about one and a half times the wage but there is no significant effect for households owning less

rural labor and credit markets this paper studies changes over time in the incidence of labor tying the existing literature is successful in explaining the emergence of this institution but contains the counterfactual implication that there should be an increasing trend in labor tying however previous contributions have so far implicitly assumed that there are no consumption credit markets available to workers i show that taking account of borrowing opportunities leads to new predictions about the evolution of permanent labor in particular declines in borrowing costs associated to efficiency gains in the financial sector lead to a fall in the fraction of rural workers who are tied in addition if consumption credit markets are operating a fall in the size of the rural population will cause under certain conditions a decline in the percentage of permanent workers these predictions are consistent with the observed trends in developing countries hence this paper complements previous theoretical work on labor tying with its addition the theory now explains the emergence persistence and final demise of this institution 1997 elsevier science b v

coercive contract enforcement law and the labor market in 19th century industrial britain british master and servant law made employee contract breach a criminal offense until 1875 we develop a contracting model generating equilibrium contract breach and prosecutions then exploit exogenous changes in output prices to examine the effects of labor demand shocks on prosecutions positive shocks in the textile iron and coal industries increased prosecutions following the abolition of criminal sanctions wages differentially rose in counties that had experienced more prosecutions and wages responded more to labor demand shocks coercive contract enforcement was applied in industrial britain restricted mobility allowed workers to commit to risk sharing contracts with lower but less volatile wages

risk coping and starvation in rural china we use a 3 year panel from two poor provinces in southern china to examine the nature of risks to which rural households are exposed and their ability to insure calorie consumption and spending of total consumption against idiosyncratic shocks to their income we find that idiosyncratic risks are indeed the main source of income variation in the sample consumption is better insured than total spending unlike total spending where full insurance is rejected in most cases calorie intake is completely insured for both land rich and land poor households in both provinces access to even modest amounts of land significantly enhances households ability to guard against total spending land rich households are much better insured against total spending than land poor households the results are robust across model specifications although generalized method of moments gmm estimations increase the magnitude of difference in total spending between the land rich and the land poor policies targeting poverty red

attached farm labor limited horizons and servility abstract two facets of attached farm labor arrangements the servility often required of attached laborers and employers interest in maintaining such workers limited horizons are described and incorporated into an otherwise standard model of attached and temporary agricultural employment substantially modifying the model s predictions the dependence of workers preferences on reference group behavior which underlies employers interest in limiting horizons may enable employers to drive even freely mobile workers wellbeing below competitive levels may imply that abolishing servility arrangements would benefit all workers gives rise to multiple equilibria in community layout and culture and sheds light on some characteristics of agrarian revolts

reputational consequences of labor coercion evidence from assam s tea plantations the right to coerce an employee is seen as advantageous to employers however if coercion gives employers a bad reputation workers may be harder to recruit we study a unique setting in assam s tea plantations in the 19th century where migrant workers were recruited under two different indentured contracts one of which was more coercive and gained notoriety in the national press and policy circles using newly collected panel data on annual migration flows to seven districts over the period 1883 1900 we find that the response of migration to increased demand for labor proxied by a rising tea price was lower for the contract that had a bad reputation workers migrated under the more coercive contract only when uninformed or misled about the terms of their employment we identify the effect of information flow by distinguishing between recruiters with and without social connections with the workers

an inquiry into quasi credit contracts the role of reciprocal credit and interlinked deals in small scale fishing communities in agrarian village societies beset with many hazards and uncertainties people evolve various means of coping with risk what is perhaps less known is that credit transactions can sometimes serve the function of reducing risk in such societies this article is concerned with examining several insurance motivated credit arrangements in small scale fishing communities a hunger insurance mechanism of reciprocal credit and a system of interlinked contracts aimed at insuring against risks in the spheres of labour and marketing relations will be extensively dealt with moreover the concept of triadic relationships will be shown to have special relevance in the case of traditional insurance arrangements aiming at controlling problems of moral hazard

targeting child labor in debt bondage despite recent multilateral efforts to single out child labor in debt bondage as one of the worst forms of child labor several important questions have yet to be addressed how pervasive is the phenomenon are there systematic correlations between the incidence of children in debt bondage and the economic legislative and financial development indicators of the economy how does an understanding of these correlates affect the way national and international policy measures aimed at targeting this form of child labor are perceived this article addresses each of these questions the empirical findings suggest strong correlation between the likelihood of the incidence of child labor in debt bondage with the stage of development of an economy the stage of financial development and enforcement of core labor rights building on this evidence the article presents a theoretical model that highlights the drawbacks and merits of a number of policies aimed at putting checks on child labor in debt bondage

monopsony power in migrant labor markets evidence from the united arab emirates by exploiting a reform in the united arab emirates that relaxed restrictions on employer transitions we provide new estimates of the monopsony power of firms over migrant workers our results show that the reform increased incumbent migrants earnings and firm retention this occurs despite an increase in employer transitions and is driven by a fall in country exits while the outcomes of incumbents improved the reform decreased demand for new migrants and lowered their earnings these results are consistent with a model of monopsony in which firms face upward sloping labor supply curves for both new recruits in source countries and incumbent migrants