Selling Labor Low: Wage Responses to Productivity Shocks in Developing Countries
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.
Year of publication: |
2006
|
---|---|
Authors: | Jayachandran, Seema |
Published in: |
Journal of Political Economy. - University of Chicago Press. - Vol. 114.2006, 3, p. 538-575
|
Publisher: |
University of Chicago Press |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Air Quality and Infant Mortality During Indonesia's Massive Wildfires in 1997
Jayachandran, Seema, (2005)
-
Life Expectancy and Human Capital Investments: Evidence From Maternal Mortality Declines
Jayachandran, Seema, (2008)
-
Why Are Indian Children So Short?
Jayachandran, Seema, (2015)
- More ...