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Push and (or) Pull? Drivers of Labour Force Participation in Indian Agriculture

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Abstract

Labour force participation rate in the Indian agricultural sector is gradually declining. This paper wants to investigate the possible causes behind it. Here both possible push and pool factors behind this decline are considered simultaneously. Initially, on the basis of 70th round NSSO data on agricultural households, it is tested whether or not marginal farmers are enjoying comparative advantage during the time of getting employment in the agricultural sector as agricultural labourer. But as ‘decline’ is a flow concept, to investigate possible reasons behind this decline, we have considered six rounds state-level NSSO data on Employment Unemployment Survey of India and its 20 major states. Applying fixed effect panel data regression technique after considering state-specific possible factors, it is found that gradual decline of per capita land holdings is the major push factor responsible for gradual decline of labour force participation rate in Indian agriculture. Apart from that, other push factors like hike of real agricultural wage rate, improvement in education level of the agricultural households and pull factor like hike of non-farm real wage, employment opportunities in construction and other non-farm activities are found significant for gradual decline of labour force participation rate in Indian agriculture.

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Notes

  1. The information is collected from different rounds of state-level NSSO report on employment–unemployment situation in India.

  2. Mainly belongs to marginal farmer household.

  3. Perception of limited employment opportunity.

  4. Most of the agricultural labourers of India are landless in nature.

  5. All possible factors are considered simultaneously.

  6. Panel data are used to deal with heterogeneity among the cross-sectional units, here 20 states of India. Though using panel data model, either fixed effect or random effect, the heterogeneity among the states can be taken care of.

  7. This was discussed in detail in Chapter-13, Ray (1998).

  8. Paid in terms of piece rate.

  9. Here we assume instantaneous consumption efficiency relationship.

  10. It can be from rental income after leasing out own land or through cultivating his own plot of land for self-consumption once in a year.

  11. 70th round National sample survey is a special type of repeat survey conducted by SAS in 59th round.

  12. Here an agricultural household is defined as a household where at least one member is employed in agriculture either in principal status or in subsidiary status during last 365 days.

  13. Mainly the marginal farmer class.

  14. Who occupies the major percentage of agricultural labour force.

  15. It is a pull factor. If the non-labour income of a possible labourer is high, then that labourer can work as agricultural labourer at low wage (piece) rate and enjoy an advantageous position in the labour market during the time of getting employment.

  16. Pull factor.

  17. There is no problem of multi-collinearity in the model.

  18. Value of different variables of 20 major states of India is collected from six rounds of NSSO report on employment–unemployment in India. All the considered variables are macro-level state-specific variables.

  19. This variable includes the construction workers.

  20. Here ‘state’ is used as cross-sectional unit in different rounds of NSSO data which itself is a geographical unit. We have considered 20 states of India, which means the cross-sectional units cannot be chosen randomly. Hence, fixed effect panel regression is appropriate here.

  21. The sign of the coefficients in all the situations are positive. This is obvious because over time per capita land holding is declining and with this labour force participation rate in agriculture is also declining.

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  1. Department of Economics, Jadavpur University, Kolkata, West Bengal, 700032, India

    Amit Kundu & Sangita Das

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  1. Amit Kundu
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  2. Sangita Das
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Correspondence to Amit Kundu.

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Kundu, A., Das, S. Push and (or) Pull? Drivers of Labour Force Participation in Indian Agriculture. Ind. J. Labour Econ. 62, 413–430 (2019). https://doi.org/10.1007/s41027-019-00182-9

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