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Selling Labor Low: Wage Responses to Productivity Shocks in Developing Countries.
- Source :
- Journal of Political Economy; Jun2006, Vol. 114 Issue 3, p538-575, 38p, 8 Charts, 2 Graphs
- Publication Year :
- 2006
-
Abstract
- Productivity risk is pervasive in underdeveloped countries. This paper highlights a way in which underdevelopment exacerbates productivity risk. Productivity shocks cause larger changes in the wage when workers are poorer, less able to migrate, and more credit-constrained because of such workers' inelastic labor supply. This equilibrium wage effect hurts workers. In contrast, it acts as insurance for landowners. Agricultural wage data for 257 districts in India for 1956-87 are used to test the predictions, with rainfall as an instrument for agricultural productivity. In districts with fewer banks or higher migration costs, the wage is much more responsive to fluctuations in productivity. [ABSTRACT FROM AUTHOR]
- Subjects :
- ECONOMICS
LABOR productivity
LABOR supply
DEVELOPING countries
WAGES
INSURANCE
Subjects
Details
- Language :
- English
- ISSN :
- 00223808
- Volume :
- 114
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- Journal of Political Economy
- Publication Type :
- Academic Journal
- Accession number :
- 21544012
- Full Text :
- https://doi.org/10.1086/503579