A Test of Heterogeneity of Family and Hired Labour in Asian Agriculture.

In this paper, the authors test the hypotheses that family and hired labor are perfect subst itutes in agricultural production in developing countries, and that t here is no quality differential between an hour of family and of hire d labor. Both hypotheses, commonly maintained as assumptions in resea rch on agricultural production, are rejected on the basis of statisti cal tests using farm-level data from India and Malaysia. The two kind s of labor are observed to have an elasticity of substitution between them that is well below infinity (indeed not significantly different from zero in the Indian case), and hired labor is found to be of hig her quality than family labor. The results suggest that more attentio n needs to be paid to the treatment of labor in theoretical and econo metric modeling and in data collection. Copyright 1987 by Blackwell Publishing Ltd