Do Farm Households Use the Labour Market as a Hedge Against Revenue Risk? Evidence from Female Labour Supply

In the absence of well-developed insurance and capital markets in less developed agriculture, producers use diverse mechanisms to mitigate the impact of the revenue risk that they are confronted with. One possibility open to them is to use the casual labour market to hedge against this risk. We address this question in the context of female labour supply from cultivator households in India. Using a static decision-theoretic household model that allows for revenue risk, and employing a large sample pertaining to the semi-arid tracts of south-central India for the period 1975-1984, we find that neither the probability of female labour force participation nor the extent of female labour supply from cultivator households respond significantly to variations in revenue risk