Smallholders, Market Failures, and Agricultural Production: Evidence from India

Joshua D. Merfeld ()
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Joshua D. Merfeld: KDI School of Public Policy and Management

No 13682, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Market completeness has important implications for household behavior. I firmly reject complete markets for smallholders but am unable to do so for non-smallholders. This leads to important differences in production behavior: smallholders reallocate labor across activities less in response to intra-seasonal crop price changes than do non-smallholders. A counterfactual exercise indicates smallholders could increase revenue by almost nine percent if they were to reallocate labor similarly to non-smallholders. The overall pattern of results is consistent with small-holders lacking sufficient wage employment opportunities. Since non-smallholders have to hire in for agricultural production, this lack of opportunities does not affect their decisions.

Keywords: markets; market failures; agriculture; labor (search for similar items in EconPapers)
JEL-codes: J20 J43 O13 Q12 Q13 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2020-09
New Economics Papers: this item is included in nep-agr, nep-dev and nep-lma
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Citations: View citations in EconPapers (2)

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