A TEST OF HETEROGENEITY OF FAMILY AND HIRED LABOUR IN ASIAN AGRICULTURE
| DOI | http://doi.org/10.1111/j.1468-0084.1987.mp49003003.x |
| Author | Anil B. Deolalikar,Wim P. M. Vijverberg |
| Published date | 01 August 1987 |
| Date | 01 August 1987 |
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 49,3 (1987)
0305-9049 $3.00
A 'l'EST OF HEI'EROGENEITY OF FAMILY
AND HIRED LABOUR IN ASIAN
AGRICULTURE
Anil B. Deolalikar and Wim P. M. Vijverberg*
I. INTRODUCTION
While a number of studies have attempted to fit agricultural production
functions to data from less-developed countries (LDCs) (Heady and
Dillon, 1961; Rao, 1965; Yotopoulos, Lau and Somel, 1970; Bardhan,
1973, Barnum and Squire, 1979), most have failed to distinguish
between family and hired labour inputs, thus implicitly maintaining the
questionable assumption of homogeneity of the two kinds of labour in
agricultural production. Owing to incentive differences as well as dif-
ferences in the nature and timing of tasks performed, family and hired
labour may not necessarily have identical effects on output nor perfect
substitutability between them. The degree of substitutability between
the two types of labour will have an important bearing on inter alla.
the labour supply and fertility of farm households and the effect of
ruralurban migration on rural employment and poverty.
In this paper, we test the hypotheses that family and hired labour
are perfect substitutes in agricultural production and have identical
effects on output. We do this by using farm-level data from India and
Malaysia to estimate a generalized production function in which the
elasticity of substitution between family and hired labour is estimated
as a free parameter. Nested within this specification are two models
assuming perfect substitutability: the first treats family and hired
labour as having identical output effects, while the second allows for a
quality differential between an hour of family and hired labour. This
allows us to compare our results with those obtained from specifications
commonly used in the literature.
In the next section, we discuss various arguments for expecting
heterogeneity between family and hired labour. The implications of
heterogeneity for labour markets and migration are discussed in Section
III, while the production function to test the hypothesis of homogeneity
is developed in Section IV. In Section V, we discuss the data, estima-
tion techniques, and empirical results. In Section VI, some possible
reasons for the observed labour heterogeneity in our samples are dis-
cussed in a conjectural fashion, and Section VII concludes.
* We acknowledge the many helpful comments of the editor. Remaining errors are our
responsibility. The major part of the work for this paper was done while both authors were
post-doctoral fellows at Yale University.
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