Title_ Agricultural Employment, Wages and Poverty in Developing Countries

Author_ Katsushi IMAI, Raghav GAIHA & Constanza DI NUCCI

Pages 145-185

Abstract_ Drawing upon panel data estimations, we have analyzed relationships between agricultural productivity, employment, technology, openness of the economy, inequality in land distribution and poverty. First, we have identified a number of important factors affecting agricultural productivity, such as agricultural R&D expenditure, irrigation, fertilizer use, agricultural tractor/machinery use, reduction in inequality of land distribution, and reduction in gender inequality. Second, while agricultural wage rates are negatively associated with agricultural productivity and food price in terms of levels, rising agricultural wage rates are positively correlated with growth in agricultural land and/or labor productivity as well as with growth in food prices, particularly after 2000. Contrary to the International Labor Organization’s 2012 claim of a widened gap between wage and labor productivity, this finding suggests a narrowing gap once the conditional relationship between the two is taken into account. Third, agricultural employment per hectare tends to increase agricultural productivity after taking account of the endogeneity of the former, while growth in agricultural employment per hectare tends to increase growth in non-agricultural employment over time with adjustment for the endogeneity of the former. Fourth, both agricultural growth and non-agricultural growth tend to lead to a reduction in overall inequality. Finally, increases in agricultural productivity (which is treated as endogenous) will reduce poverty significantly through contributing to overall economic growth. Overall, policies to increase agricultural productivity and agricultural employment are likely to increase non-agricultural growth, overall growth and reduce poverty. The presence of institutional frameworks to promote greater equality between men and women is likely to be one of the key factors, consistent with the important role of women in promoting agricultural productivity in developing countries.

Keywords_ Agriculture, Poverty, Employment, Wage