Poverty Decline, Agricultural Wages, and Non-Farm Employment in Rural India 1983–2004

Lanjouw, Peter; Murgai, Rinku

Poverty Decline, Agricultural Wages, and Non-Farm Employment in Rural India 1983–2004

2009

Lanjouw, Peter | Murgai, Rinku

The authors analyze five rounds of National Sample Survey data covering 1983, 1987/8, 1993/4, 1999/0, and 2004/5 to explore the relationship between rural diversification and poverty. Poverty in rural India declined at a modest rate during this period. The authors provide region-level estimates that illustrate considerable geographic heterogeneity in this progress. Poverty estimates correlate well with region-level data on changes in agricultural wage rates. Agricultural labor remains the preserve of the uneducated and also to a large extent of the scheduled castes and scheduled tribes. Although agricultural labor grew as a share of total economic activity over the first four rounds, it had fallen back to the levels observed at the beginning of the survey period by 2004. This all-India trajectory masks widely varying trends across states. During this period, the rural non-farm sector grew modestly, mainly between the last two survey rounds. Regular non-farm employment remains largely associated with education levels and social status that are rare among the poor. However, casual labor and self-employment in the non-farm sector reveal greater involvement by disadvantaged groups in 2004 than in the preceding rounds. The implication for poverty is not immediately clear - the poor may be pushed into low-return casual non-farm activities due to lack of opportunities in the agricultural sector rather than being pulled by high returns offered by the non-farm sector. Econometric estimates reveal that expansion of the non-farm sector is associated with falling poverty via two routes: a direct impact on poverty that is likely due to a pro-poor marginal incidence of non-farm employment expansion; and an indirect impact attributable to the positive effect of non-farm employment growth on agricultural wages. The analysis also confirms the important contribution to rural poverty reduction from agricultural productivity, availability of land, and consumption levels in proximate urban areas.

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AGROVOC Keywords

age groups agricultural development agricultural growth agricultural production agricultural productivity agricultural sector agricultural workers crop production crops cultivation data quality democracy development economics economic growth farm income farm sector farm workers grain harvesting household surveys human capital motivation occupation occupations population growth primary education produce rural areas rural employment rural poor rural population rural poverty safety sowing transplanting unemployment wage rate yields

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Poverty lines; Landholdings; Employment generation; Present study; Wage rates; Consumption quintiles; Employment trends; Farm production; Non-farm sector; Inequality; Rural growth; General equilibrium; Farm employment; Public spending; Land availability; Unemployed; Agricultural labor; Primary school education; Daily wage; Presented evidence; Agricultural employment; Employee; Farm economy; Welfare improvements; Reduction in poverty; Political economy; Non-farm employment; Wage data; Female workers; Labor market; Correlates of poverty; Agricultural laborers; Employment levels; Total factor productivity; Farm productivity; Self employment; Income earning; Retail trade; Household incomes; Rural living standards; Primary school; Changes in poverty; Rural; Employment rate; Labor force; Estimates of poverty; Poor households; Rural area; Impact on poverty; Real wages; Determinant of poverty; Farm growth; Productive activities; Farm; Productivity data; Economic diversification; Rural livelihoods; Farm self-employment; Present evidence; Safety net; Regular workers; Consumption poverty; Rural poverty reduction; Rural inequality; Salaried employment; Drivers; Wage determination; Labor economics; Employment share; Agricultural output; Agricultural wage; Farm incomes; Human development; Poor; Comparability problems; Employment probabilities; Rural industries; Regular employment; Agricultural wage labor; Long-term employment; Poverty rates; Casual workers; Worker; Agricultural labour; Wage growth; Employment growth; Farm income share; Determinants of poverty; Employment rates; Total employment; Crop; Decline in poverty; Employment status; Rural household income; Skilled labor; Rural income generation; Rural household; Per capita consumption; Previous section; Preceding sections; Agricultural wage employment; Poverty impact; Crises; Farm activities; Incidence of poverty; Jobs; Indicators of poverty; Farm self- employment; Externalities; Labor markets; Land holdings; Adult males; Rural labor; Agricultural wages; Real wage; Agricultural productivity growth; Farm products; Disadvantaged groups; Regular jobs; Employment patterns; Wage increase; Household characteristics; Rural income; Poverty estimates; Rural workforce; Income shares

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Poverty Decline, Agricultural Wages, and Non-Farm Employment in Rural India 1983–2004

2009

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