Land market restrictions, women's labor force participation and wages in a rural economy

Emran, M. Shahe and Shilpi, Forhad (2014): Land market restrictions, women's labor force participation and wages in a rural economy.

Abstract

We analyze the effects of land market restrictions on the rural labor market outcomes for women. The existing literature emphasizes two mechanisms through which land restrictions can affect the economic outcomes: the collateral value of land, and (in)security of property rights. Our analysis focuses on an alternative mechanism where land restrictions increase costs of migration out of villages. The testable prediction of collateral effect is that both wage and labor force participation move in the same direction, and insecurity of property rights reduces labor force participation, and increases wage. In contrast, if land restrictions work primarily through higher migration costs, labor force participation increases, while wage declines. For identification, we exploit a natural experiment in Sri Lanka where historical malaria played a unique role in land policy. We provide robust evidence of a positive effect of land restrictions on women's labor force participation, but a negative effect on female wages. The empirical results thus contradict a collateral or insecure property rights effect, but supports migration costs as the primary mechanism.

• Item Type: MPRA Paper
• Language: English
• Keywords: Land Market Restrictions, Collateral Effect, Insecure Property Rights, Migration Costs, Labor Market, Women's Labor Force Participation, Wage, Sri Lanka, Historical Malaria
• Subjects: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs; J - Labor and Demographic Economics > J4 - Particular Labor Markets; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development

References

Acemoglu, D and Simon Johnson and James A. Robinson, 2001. “The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.

Amuedo-Dorantes, Catalina and Susan Pozo (2006), “Migration, Remittances, and Male and Female Employment Patterns”, American Economic Review, Papers and Proceedings, May 2006.

Ardington, C, A. Case, and V. Hosegood (2009), “Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa”, American Economic Journal: Applied Economics, January 2009, pp. 22-48.

Bardhan, P (1983), “Labor Tying in a Poor Agrarian Economy: A Theoretical and Empirical Analysis”, Quarterly Journal of Economics, August 1983.

Bardhan, P (1979), “Wages and Unemployment in a Poor Agrarian Economy”, Journal of Political Economy, June 1979.

Besley, T (1995): “Property Rights and Investment Incentives: Theory and Evidence from Ghana.” Journal of Political Economy, 103, 5, 1995: 903-937.

Briet, O. J. T, P. Vounatsou, D. M. Gunawardena, G. Galappaththy, P. Amerasinghe (2008), “Temporal Correlation Between Malaria and Rainfall in Sri Lanka”, Malaria Journal, May 2008.

Chowdhury, Mohammad Tarequl H., Bhattacharya, Prasad Sankar, Mallick, Debdulal, and Ulubasoglu, Mehmet Ali, 2014. “An empirical inquiry into the role of sectoral diversification in exchange rate regime choice," European Economic Review, Elsevier, vol. 67(C), pages 210-227.

Clemesha, W (1934), “Brief Account of the Natural History of Malaria in Ceylon”, Ceylon Journal of Science, 1934, 3: 157-172.

De Silva, K. M. (1981), A History of Sri Lanka, London, C. Hurst Publisher.

Department of Census and Statistics (2008), Household Income and Expenditure Survey-2006/07: Final Report, Colombo: Sri Lanka.

Department of Census and Statistics (2009), Demographic and Health Survey 2006/07: Prevalence of Anemia among Children and Women in Sri Lanka, Colombo: Sri Lanka.

Emran, M. Shahe and F. Shilpi (2012), “The Extent of the Market and Stages of Agricultural Specialization”, Canadian Journal of Economics, August, 2012.

Emran, M. Shahe and F. Shilpi (forthcoming), “General Equilibrium Effects of Land Market Restrictions on Labor Market: Evidence from Wages in Sri Lanka”, forthcoming in American Journal of Agricultural Economics. Prepublication working paper version available from SSRN.

Emran, M. Shahe and Zhaoyang Hou, 2013. “Access to Markets and Rural Poverty: Evidence from Household Consumption in China," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 682-697, May.

Emran, M. Shahe, Virginia Robano, and Stephen C. Smith, 2014. “Assessing the Frontiers of Ultrapoverty Reduction: Evidence from Challenging the Frontiers of Poverty Reduction/Targeting the Ultra-poor, an Innovative Program in Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 62(2), pages 339 - 380.

Eswaran, M and B. Ramaswami, W. Wadhwa (2009), Status, Caste, and Time Allocation of Women in Rural India, Working paper, University of British Columbia.

Eswaran, M and A. Kotwal (1985), “A Theory of Two-tier Labor Markets in Agrarian Economies”, American Economic Review, March 1985.

Field, Erica, (2007), “Entitled to Work: Urban Property Rights and the Labor Supply in Peru,” Quarterly Journal of Economics, Vol. 122(4), p1561-1602.

Foster, A, and M. Rosenzweig (1993): “Information, Learning, and Wage rates in Low Income Rural Areas”, Journal of Human resources, 23, 759-790.

Foster A, and M. Rosenzweig (1994): “A Test of Moral Hazard in the Labor Market: Effort, Health and Calorie Consumption”, Review of Economics and Statistics.

Goldin, C (1995), The U-Shaped Female Labor Force Function in Economic Development and Economic History, in Investment in Women's Human Capital and Economic Development, Ed. by T. Paul Schultz, Chicago University Press.

Goldstein, M and C. Udry (2008): “The Profits of Power: Land Rights and Agricultural Investment in Ghana”, Journal of Political Economy, 2008.

Hayashi, Fumio and Edward C. Prescott (2008), “The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy," Journal of Political Economy, vol. 116(4), pages 573-632.

Harrison, G (1978), Mosquitos, Malaria and Man: A History of the Hostilities Since 1880s, John Murray, London.

Iyer, Lakshmi, Xin Meng and Nancy Qian (2009), “Unbundling Property Rights: The Impact of Urban Housing Reforms on Labor Mobility and Savings in China," mimeo.

Jacoby, H, Guo, L, and S. Rozelle (2002), “Hazards of Expropriation: Tenure Insecurity and Investment in Rural China”, American Economic Review, December, 2002.

Khandker, S (1987), “Labor Force Participation of Married Women in Bangladesh”, Review of Economics and Statistics, August, 1987.

Klein, R and F. Vella (2009), “A Semiparametric Model for Binary Response and Continuous Outcomes under Index Heteroscedasticity”, Journal of Applied Econometrics, v. 24, iss. 5, pp. 736-62

Klein, Roger and Francis Vella. (2010) “Estimating a Class of Triangular Simultaneous Equations Models Without Exclusion Restrictions.” Journal of Econometrics.

Lewbel, A (forthcoming), “Using Heteroskedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models”, Journal of Business and Economic Statistics.

Lokshin, M and E. Glinskaya, (2009), “The Effect of Male Migration on Employment Patterns of Women in Nepal," World Bank Economic Review, Oxford University Press, vol. 23(3), pages 481-507, November.

Mu, R and D. Van de Walle (2009), Left Behind to Farm? Women's Labor Re-Allocation in Rural China, World Bank Policy Research Working Paper, 5107, October 2009.

Mulligan, C and Y. Rubinstein (2008), “Selection, Investment, and Women's Relative Wages Over Time”, Quarterly Journal of Economics, vol. 123. no. 3.

Newman, P (1965): Malaria Eradication and Population Growth: With Special Reference to ceylon and British Guyana, School of Public Health, University of Michigan.

Peebles, Patrick, 2006, A History of Sri Lanka, Greenwood Publishing Group.

Rustomjee, J (1944): Observations Upon the Epidemiology of Malaria in Ceylon, Sessional Paper 24, 1944, Government Press, Colombo.

Schaffner, J. A (2002), “Heteroskedastic Sample Selection And Developing-Country Wage Equations”, The Review of Economics and Statistics, vol. 84, issue 2.

Sen, A (1981), “Public Action and the Quality of Life in Developing Countries”, Oxford Bulletin of Economics and Statistics, 43, 287-319.

Stiglitz J (1976): “The Efficiency Wage Hypothesis, Surplus Labor and the Distribution of Income in L.D.C.'s” , Oxford Economic Papers, 28(2), July 1976, pp. 185-207.

Wijesundera, M (1988), “Malaria Outbreaks in New Foci in Sri Lanka”, Parasitol Today, 1988.

World Bank (2008), Land Reforms in Sri Lanka: A Poverty and Social Impact Analysis, South Asia Region, World Bank, Washington DC.