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on Central and Western Asia |
| By: | Eatzaz Ahmad (Quaid-i-Azam University, Islamabad.); Muhammad Arshad (International School of Industrial Business Management, Shanghai University, China) |
| Abstract: | Using micro-level household data for rural and urban Pakistan, this study estimates Engel equations for 22 commodity groups with quadratic spline specification, in which the number and locations of knots are determined through a search procedure. The study finds that the resulting flexibility produces many interesting patterns of changes in the classification of goods into necessities and luxuries across income ranges. This suggests that a uniform tax structure will have varying implications for budget allocation and welfare of households belonging to different income classes. This information can be gainfully utilised in preparing income transfer policies that could supplement uniform tax regimes. |
| Keywords: | Consumer Economics, Empirical Analysis |
| JEL: | D12 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2007:41&r=cwa |
| By: | Rizwana Siddiqui (Pakistan Institute of Development Economics, Islamabad.) |
| Abstract: | This paper studies dynamic effects of agriculture trade in the context of domestic and global liberalisation. Being the largest sector of the economy, the agriculture sector contributes substantially to the growth process. Using a small CGE model for Pakistan and a 2002 Pakistan Social Accounting Matrix as data base, the simulations are conducted to measure the effects of domestic agriculture trade liberalisation in isolation and in conjunction with changes in the world economy. The novelty of this paper is that it introduces dynamics in the Pakistani CGE model through capital accumulation. The results illuminate the greater effectiveness of agriculture trade liberalisation in promoting the overall growth process, given increased market access because of liberalisation in the world economy. |
| Keywords: | International Trade, Growth, Dynamic CGE |
| JEL: | O4 F15 F14 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2007:38&r=cwa |
| By: | Sajawal Khan (Pakistan Institute of Development Economics, Islamabad.); Abdul Qayyum (Pakistan Institute of Development Economics, Islamabad.) |
| Abstract: | In this paper we construct two measures of the monetary policy stance. The stance of monetary policy, regarded as a quantitative measure of whether the policy is too tight, neutral, or too loose relative to objectives of stable prices and output growth, is useful and important for at least two reasons. First, it helps the authority (central bank) to determine the course of monetary policy needed to keep the objective (goals) within the target range. Secondly, a quantitative measure of the stance is important for an empirical study of the transmission of monetary policy actions through the economy. Measuring the stance of the monetary policy free from any criticism, however, is not an easy task. As pointed out by Gecchetti (1994), “there seems to be no way to measure monetary actions that does not raise serious objections”. Our results show that an individual coefficient Monetary Condition Index (MCI) performs better than both the summarised MCI coefficient and the Overall measure proposed by Bernanke and Mihov (1998). The results show that in the 21-year period from 1984 to 2004, the demand shocks have dominated for about eight years. The MCI (IS-Individual coefficient) can explain six of them. However, it indicates the negative demand shock in two years as neutral. The other two measures, however, fail to capture demand shocks most of the time. This analysis suggests that the MCI (IS-Individual coefficient) plays an important role in determining output and inflation when the economy is not dominated by supply shocks. The results also show that supply shocks are dominant in the case of Pakistan. Furthermore, the exchange rate channel is more important than the interest rate channel. |
| Keywords: | Monetary Policy Measures, Monetary Condition Index, Composite Measures |
| JEL: | E42 E52 E58 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2007:39&r=cwa |
| By: | Iris Bohnet (Kennedy School of Government, Harvard University); Fiona Greig (Kennedy School of Government, Harvard University); Benedikt Herrmann (School of Economics, University of Nottingham); Richard Zeckhauser (Kennedy School of Government, Harvard University) |
| Abstract: | Due to betrayal aversion, people take risks less willingly when the agent of uncertainty is another person rather than nature. Individuals in six countries (Brazil, China, Oman, Switzerland, Turkey, and the United States) confronted a binary-choice trust game or a risky decision offering the same payoffs and probabilities. Risk acceptance was calibrated by asking individuals their “minimum acceptable probability” (MAP) for securing the high payoff that would make them willing to accept the risky rather than the sure payoff. People’s MAPs are generally higher when another person rather than nature determines the outcome. This indicates betrayal aversion. |
| JEL: | C72 C91 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2007-08&r=cwa |
| By: | Kamil Yılmaz (Department of Economics, Koç University); Şule Özler (Economics Department, UCLA); Erol Taymaz (Department of Economics, METU) |
| Abstract: | In a dynamic panel data framework, we investigate the factors influencing the export decision of the Turkish manufacturing plants over the 1990-2001 period. Our results support the presence of high sunk costs of entry to export markets, as well as the hypothesis that the full history of export participation matters for the current export decision. We further show that the efect of the past export experience on current export decision rapidly depreciates over time: Recent export market participation matters more than the participation further in the past. Finally, we show that while persistence in exporting helps lower the costs of re-entry today, there are diminishing returns to export experience. Our results are robust to plant characteristics (plant size, technology, composition of the employment), the spillovers from the presence of exporters in the same industry, as well as industry and year efects. |
| Keywords: | Export decision, productivity, sunk costs, plant characteristics |
| JEL: | F14 D21 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:0706&r=cwa |
| By: | Kamil Yılmaz (Department of Economics, Koç University); Şule Özler (UCLA) |
| Abstract: | We examine the effects of trade policy changes on the evolution of plant productivity. Plant level productivities are estimated for the 1983-96 period following the procedure of Olley and Pakes (1996). Industry averages indicate that productivity gains are largest in import competing industries with highest gains reaching to 8% per year during periods of rapid decline in protection rates. A decomposition of industry level productivity gains also suggests important differences across sectors by trade orientation. Though reallocation of market shares to more productive plants are important in both export oriented, and import competing sectors, within plant productivity improvements are significant only in export-oriented sectors. We also investigate the effects of changes in protection rates on plant level productivities using regressions that control for endogeneity of protection rates (tariff and non-tariff). We find that productivity improvements resulting from declining protection levels are statistically significant and economically important, especially in import competing sectors. This analysis also suggests that there is a huge degree of heterogeneity, measured by plant size, in response to changes in protection rates. |
| Keywords: | Production function; semi-parametric estimation; protection; import penetration; domestic competition. |
| JEL: | F13 D24 C14 |
| Date: | 2004–07 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:0704&r=cwa |
| By: | Ronia Hawash (Faculty of Management Technology, The German University in Cairo) |
| Abstract: | Although Egypt has begun industrialization long ago (1920's), it is still lagging far behind other countries that have begun the industrialization process much later than Egypt. The arising problem is that the Egyptian manufactures' sector is facing a deteriorating position in terms of trade, as the Egyptian economy faces competitive pressures from three fronts: First, countries within the MENA region which opened up their economies early and took positive measures to increase their competitiveness such as Tunisia and Morocco. Second, East Asian economies and European transition economies which are characterized by having more efficient productive structures using skilled labor and capital intensive activities and hence produce higher value added and better quality goods. Third, the large unskilled, labor abundant, low wage economies such as China, India and Bangladesh that have been integrating rapidly in the global economy, exerting growing competitiveness pressures on countries exporting low-skilled manufactures such as Egypt. This paper deduces that the constraints to having a booming industrial sector are related to the inefficient human resource development, technical constraints, legislative constraints and economic constraints. Accordingly, the paper recommends having more investments in human development, building the capabilities of the public sector, more enhancements for the small industries, and managing the process of integration in the global economy. |
| Keywords: | Industrial development, industrial policy |
| JEL: | O14 L60 E61 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:guc:wpaper:1&r=cwa |
| By: | Djavad Salehi-Isfahani |
| Abstract: | Despite nearly three decades of revolutionary government rule, poverty and inequality remain the central issues of political debate in Iran. The unexpected electoral victory of Ahmadinejad, the populist candidate in the 2005 presidential election, has been widely attributed to rising poverty and inequity. Using household survey data, I examine the trends in poverty and inequality for the last three decades and show that this thesis is not grounded in facts. Survey data show that poverty has substantially declined in recent years, and is low by international standards and in comparison with pre-revolution years. This ¯nding is consistent with pro-poor policies of the Islamic government, mainly in provision of basic infrastructure such as electricity, safe drinking water, and health. However, the same policies have not been as elective in reducing in- equality, which, after an initial decline following the Revolution, has remained basically constant in the post-Revolution period. |
| Keywords: | Poverty, Inequality, and Populist Politics in Iran |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:vpi:wpaper:e07-1&r=cwa |
| By: | Kuntala Lahiri-Dutt; |
| Abstract: | This paper presents an analysis of the current status of the Indian coal sector, which is poised for major changes with liberalisation and privatisation of the Indian economy, and critically analyses some policy issues. The state-owned Coal India Limited has been ailed by economic problems and has been responsible for causing serious social disruptions and environmental hazards in its areas of operation. The monopoly status that the public sector companies have enjoyed for over 3 decades has acted as a disincentive in improving the social and environmental performance of the industry, the major effort being put on improving the operational processes through the introduction of technology. The substantial liberalisation of the sector would need to prioritise not only a more integrated and investor-friendly regulatory environment but also take a close look at some old laws of colonial vintage, at issues relating to social equity and justice, and incorporate some of the international compliance standards being put forth by the international agencies. The paper also suggests that the government must develop and implement an integrated energy policy, of which coal is a part. Moreover, it must develop efficient coal markets and raise India’s profile in the world coal markets, commensurate with India’s status as the third-largest coal producer in the world. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2007-16&r=cwa |
| By: | Svitlana Maksymenko; M. Rabbani |
| Abstract: | . . . |
| JEL: | O10 O15 O47 O53 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:330&r=cwa |
| By: | Christopher J. Green (Dept of Economics, Loughborough University); Victor Murinde (Birmingham Business School, The University of Birmingham) |
| Abstract: | Taxation has potentially important implications for corporate behaviour. However, there have been few studies of the impact of taxation on companies in developing countries, and fewer still concerned with unquoted companies. In this paper, we study the impact of tax policy on the financial decisions of a sample of unquoted companies in India during the period 1989-99 when tax rates were generally reduced as part of a wider programme of financial liberalization. We examine the impact of the tax regime on company financing decisions, within the context of a model of company leverage, controlling for non-tax influences suggested by the theory of corporate finance. The analysis is carried out using a balanced panel consisting of the published accounts of 97 Indian unquoted companies which reported continuously during 1989-99. The model is estimated using GMM. Estimates of the impact of the 1990s tax reforms are derived, and implications for policy are drawn. |
| Keywords: | India, corporate finance, taxation |
| JEL: | G30 G32 O16 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2007_25&r=cwa |
| By: | Chandra Pankaj; Jain Nimit |
| Abstract: | The logistics industry in India is evolving rapidly and it is the interplay of infrastructure, technology and new types of service providers that will define whether the industry is able to help its customers reduce their logistics costs and provide effective services (which are also growing). Changing government policies on taxation and regulation of service providers are going to play an important role in this process. Coordination across various government agencies requires approval from multiple ministries and is a road block for multi modal transport in India. At the firm level, the logistics focus is moving towards reducing cycle times in order to add value to their customers. Consequently, better tools and strategies are being sought by firms in order to enhance their decision making. In this paper, we provide a perspective on these issues, outline some of the key challenges with the help of secondary information, and describe some interesting initiatives that some firms & industries are taking to compete through excellence in managing their logistics. |
| Date: | 2007–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:2007-03-07&r=cwa |
| By: | Jain, Varinder |
| Abstract: | ‘What has been the quality of jobs generated by Punjab’s urban unorganised establishments in an era of globalisation?’ is the central question addressed in this paper. It is argued that the unorganised establishments’ growth, under the conditions of exogenous technology, may be due to intensive and extensive usage of hired labour. Through secondary and primary data analysis, it is concluded that these unorganised establishments have generated a sufficiently large number of such jobs that may be characterized as of poor quality in terms of low earnings, limited upward mobility, unjust wage setting, uninformed job termination and low job satisfaction. |
| Keywords: | Unorganised Manufacturing; Unorganised Industry; Small Scale Industry; Hired Workers; Labour; Quality Employment; Punjab; India |
| JEL: | J71 L6 |
| Date: | 2007–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5756&r=cwa |
| By: | Sonia Bhalotra |
| Abstract: | There are severe inequalities in health in the world, poor health being concentrated amongst poor people in poor countries. Poor countries spend a much smaller share of national income on health expenditure than do richer countries. What potential lies in political or growth processes that raise this share? This depends upon how effective government health spending in developing countries is. Existing research presents little evidence of an impact on childhood mortality. Using specifications similar to those in the existing literature, this paper finds a similar result for India, which is that state health spending saves no lives. However, upon allowing lagged effects, controlling in a flexible way for trended unobservables and restricting the sample to rural households, a significant effect of health expenditure on infant mortality emerges, the long run elasticity being about -0.24. There are striking differences in the impact by social group. Slicing the data by gender, birth-order, religion, maternal and paternal education and maternal age at birth, I find the weakest effects in the most vulnerable groups (with the exception of a large effect for scheduled tribes). |
| Keywords: | public spending, health, poverty, infant mortality, India |
| JEL: | I12 J13 C33 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:07/169&r=cwa |
| By: | Sonia Bhalotra |
| Abstract: | This paper investigates the impact of macroeconomic shocks on infant mortality in India and investigates likely mechanisms. A recent OECD-dominated literature shows that mortality at most ages is pro-cyclical but similar analyses for poorer countries are scarce, and both income risk and mortality risk are greater in poor countries. This paper uses individual data on infant mortality for about 150000 children born in 1970- 1997, merged by birth-cohort with a state panel containing information on aggregate income. Identification rests upon comparing the effects of annual deviations in income from trend on the mortality risks of children born at different times to the same mother, conditional upon a number of state-time varying covariates including rainshocks. I cannot reject the null that income shocks have no effect on mortality in urban households, but I find that rural infant mortality is counter-cyclical, the elasticity being about -0.46. This is despite the possibility that relatively high risk women avert birth or suffer fetal loss in recessions. It seems related to the fact that women’s participation in the (informal) labour market increases in recessions, presumably, to compensate a decline in their husband’s wages. Consistent with this but, in contrast to results for richer countries, antenatal and postnatal health-care decline in recessions. These effects are reinforced by pro-cyclicality in state health and development expenditure. Another interesting finding that is informative about the underlying mechanisms is that the effect of aggregate income on rural mortality is driven by non-agricultural income. |
| Keywords: | infant mortality, income volatility, business cycles, India , health care, maternal labour supply, public expenditure. |
| JEL: | I12 J10 O49 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:07/181&r=cwa |
| By: | Birthal, P.S.; Joshi, P.K.; Roy, Devesh; Thorat, Amit |
| Abstract: | "Agricultural diversification towards high-value crops can potentially increase farm incomes, especially in a country like India where demand for high-value food products has been increasing more quickly than that for staple crops. Indian agriculture is overwhelmingly dominated by smallholders, and researchers have long debated the ability of a smallholder-dominated subsistence farm economy to diversify into riskier high-value crops. Here, we present evidence that the gradual diversification of Indian agriculture towards high-value crops exhibits a pro-smallholder bias, with smallholders playing a proportionally larger role in the cultivation of vegetables versus fruits. The observed patterns are consistent with simple comparative advantage-based production choices. The comparatively high labor endowments of the small farmers, as reflected in their greater family sizes, induce them to diversify towards vegetables. Although fruit cultivation is also labor intensive (as compared to cultivation of staples), fruits are relatively capital intensive, making them a less advantageous choice for smallholders who tend to have low capital endowments. Furthermore, both the probability of participation in fruit and vegetable cultivation as well as land allocation to horticulture decreases with the size of landholdings in India. Small or medium holders do not appear to allocate a greater share of land to fruits or vegetables. However, the share allocated to vegetables is significantly higher if the family size is bigger, while the reverse is true in the case of fruits." from Authors' Abstract |
| Keywords: | diversification, Smallholders, High value agriculture, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:00727&r=cwa |
| By: | Sonia Bhalotra; Arthur van Soest |
| Abstract: | A dynamic panel data model of neonatal mortality and birth spacing is analyzed, accounting for causal effects of birth spacing on subsequent mortality and of mortality on the length of the next birth interval, while controlling for unobserved heterogeneity in mortality (frailty) and birth spacing (fecundity). The model is estimated using micro data on almost 30,000 children of 7,300 Indian mothers, for whom a complete retrospective record of fertility and child mortality is available. Information on sterilization is used to identify an equation for completion of family formation that is needed to account for right-censoring in the data. We find clear evidence of frailty, fecundity, and causal effects of birth spacing on mortality and vice versa, but find that birth interval effects can explain only a limited share of the correlation between neonatal mortality of successive children in a family. We also predict the impact of mortality on total fertility. Model simulations suggest that, for every neonatal death, an additional 0.37 children are born, of whom 0.3 survive. |
| Keywords: | fertility, birth spacing, neonatal mortality, health, dynamic panel data models, siblings |
| JEL: | I12 J13 C33 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:07/168&r=cwa |
| By: | Fan, Shenggen; Gulati, Ashok; Thorat, Sukhadeo |
| Abstract: | "This paper reviews the trends in government subsidies and investments in and for Indian agriculture; develops a conceptual framework and model to assess the impact of various subsidies and investments on agricultural growth and poverty reduction; and, presents several reform options with regard to re-prioritizing government spending and improving institutions and governance. There are three major findings. First, initial subsidies in credit, fertilizer, and irrigation have been crucial for small farmers to adopt new technologies. Small farms are often losers in the initial adoption stage of a new technology since prices of the agricultural products are typically being pushed down by greater supply of products from large farms, which adopted the new technology. But as more and more farmers have adopted HYV, continued subsidies have led to inefficiency of the overall economy. Second, agricultural research, education, and rural roads are the three most effective public spending items in promoting agricultural growth and poverty reduction during all periods. Finally, the trade-off between agricultural growth and poverty reduction is generally small among different types of investments. As for agricultural research, education, and infrastructure development, they have large growth impact and a large poverty reduction impact. Several policy lessons can be drawn. Agricultural input and output subsidies have proved to be unproductive, financially unsustainable, environmentally unfriendly in recent years, and contributed to increased inequality among rural Indian states. To sustain long-term growth in agricultural production, and therefore provide a long-term solution to poverty reduction, the government should cut subsidies of fertilizer, irrigation, power, and credit and increase investments in agricultural research and development, rural infrastructure, and education. Promoting nonfarm opportunities is also important. However, simply reallocating public resources is not the full solution. Reforming institutions can have an equal, if not larger, impact on future agricultural and rural growth and rural poverty reduction." from Authors' Abstract |
| Keywords: | Rural poverty, Agricultural growth, Investments, subsidies, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:00716&r=cwa |
| By: | Gregg Huff; Giovanni Caggiano |
| Abstract: | This article uses new data sets to analyze labor market integration between 1882 and 1936 in an area of Asia stretching from South India to Southeastern China and encompassing the three Southeast Asian countries of Burma, Malaya and Thailand. We find that by the late nineteenth century, globalization, of which a principal feature was the mass migration of Indians and Chinese to Southeast Asia, gave rise to both an integrated Asian labor market and a period of real wage convergence. Integration did not, however, extend beyond Asia to include core industrial countries. Asian and core areas, in contrast to globally integrated commodity markets, showed divergent trends in unskilled real wages |
| Keywords: | Globalization; Labor market integration; Migration; Southeast Asia; Terms of trade, real wage convergence |
| JEL: | F15 F22 J31 N35 O15 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2007_14&r=cwa |
| By: | David T. Coe |
| Abstract: | Globalisation is having important effects on labour markets in OECD countries. The global supply of labour has increased enormously with the emergence of China and India. At the same time technological advances have contributed to heightened income inequality and changed the nature of globalisation itself, most vividly demonstrated by the rapid growth of offshoring of business services that were previously nontradable. It is argued in this paper that these developments are best characterized as an intensification and broadening of the process of globalisation rather than a fundamental change in the nature of globalisation. They will, nevertheless, have long-lasting effects on OECD labour markets, increasing the urgency of implementing the labour market policies set out in the Restated OECD Job Strategy. The paper concludes that the most important implication of the emergence of China and India in the context of widespread perceptions of increasing economic inequality may be to reduce support for globalisation in OECD countries. <BR>La mondialisation a des effets importants sur les marchés du travail des pays de l’OCDE. L’offre mondiale de main-d'œuvre a augmenté considérablement avec l’émergence de la Chine et l’Inde. Dans le même temps, les progrès technologiques ont contribué à renforcer les inégalités de revenus et ont changé la nature même de la mondialisation, comme en témoigne la croissance rapide de la délocalisation des services aux entreprises, qui étaient auparavant non-échangeables. On fait valoir dans ce document que ces évolutions correspondent plus à une intensification et un élargissement du processus de mondialisation qu'à un changement fondamental de nature de la mondialisation. Elles auront, néanmoins, des effets durables sur les marchés du travail dans les pays de l'OCDE, et renforcent de ce fait l'urgence de mettre en œuvre les politiques du marché du travail identifiées dans «La stratégie de l'OCDE pour l'emploi révisée ». Le document conclut que, dans un contexte de perception accrue de croissance des inégalités économiques, la principale conséquence de l’émergence de la Chine et l’Inde peut être de réduire le soutien à la mondialisation dans les pays de l’OCDE. |
| JEL: | F13 F16 J08 |
| Date: | 2007–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:63-en&r=cwa |
| By: | Fafchamps, Marcel; Vargas-Hill, Ruth; Minten, Bart |
| Abstract: | "Using original data collected about growers, traders, processors, markets, and village communities, we compare the situation in four states – Tamil Nadu, Uttar Pradesh, Maharashtra, and Orissa. We examine the way that information about crop attributes is conveyed (or not) along the value chain. We also document the infrastructure available at the level of the market. We find that little information circulates about unobservable crop characteristics. Growers receive a price premium when they dry, grade, and pack their produce, but we find no evidence that information about crop health and safety or agricultural practices circulates through the value chain or that growers are encouraged to follow specific agricultural practices for quality purposes. Market infrastructure is deficient regarding sanitation, with few public toilets, inadequate drainage, and no coordinated pest control." from Authors' Abstract |
| Keywords: | Food marketing, Food safety, Food quality, Value chain, |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:00717&r=cwa |
| By: | Takahiro Ito; Takashi Kurosak |
| Abstract: | This paper investigates the effects of weather risk on the off-farm labor supply of agricultural households in a developing country. Faced with the uninsurable risk of output and food price fluctuations, poor farmers in developing countries may diversify labor allocation across activities in order to smooth income in real terms.A key feature of this paper is that it distinguishes different types of off-farm labor markets: agriculture and nonagriculture on the one hand, and, wages paid in cash and wages paid in kind on the other. We develop a theoretical model of household optimization, which predicts that when farmers are faced with more production risk in their farm production, they find it more attractive to engage in nonagricultural work as a means of risk diversification, but the agricultural wage sector becomes more attractive when food security is an important issue for the farmers and agricultural wages are paid in kind. To test this prediction, we estimate a multivariate twolimit tobit model of labor allocation using household data from rural areas of Bihar and Uttar Pradesh, India. The regression results show that the share of the off-farm labor supply increases with weather risk, the increase is much larger in the case of nonagricultural work than in the case of agricultural wage work, and the increase is much larger in the case of agricultural wages paid in kind than in the cash wage case. Simulation results based on the regression estimates show that the sectoral difference is substantial, implying that empirical and theoretical studies on farmers' labor supply response to risk should distinguish between the types of off-farm work involved. |
| Keywords: | covariate risk, non-farm employment, self-employment, food security, India |
| JEL: | Q12 O15 J22 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d07-226&r=cwa |