Research

Working Papers

Land Acquisition and Rural Labor Markets: Evidence from Special Economic Zones in India (Job Market Paper)

My job market paper evaluates the labor market impact of diverting agricultural land for non-agricultural use in India. Special Economic Zones (SEZs) in India have the potential to induce structural changes in the rural economy which is characterized by overpopulation in the agricultural sector. Using nationally representative sample survey data and a new data set compiled using archival research of newspaper articles, parliamentary questions and minutes of the SEZ Board of Approval, this paper evaluates the impact of land acquisition for setting up SEZs in India on rural labor markets in a difference-in-differences and event time framework. We find that land acquisition leads to a significant reduction in time spent in self-farming. Paradoxically, this leads to a significant increase in workers' reliance on the traditional agricultural sector for subsistence as time spent in non-agricultural employment does not increase significantly. These effects are present both, in the short and medium-run. The main mechanism explaining the results is increased uncertainty about landownership after land acquisition leading to a reduction in area under cultivation. This reduces labor demand in agriculture, suppressing agricultural wages and worsening income inequality. Our analysis suggests that there are important distributional effects of the SEZ policy. While land acquisition for SEZs converts small and marginal farmers into landless agricultural workers, it provides large farmers with an opportunity to diversify towards higher productivity non-agricultural production.

Does Historical Land Inequality Attenuate the Positive Impact of India's Employment Guarantee Program? (published in World Development 124 (2019): 104662)

By providing 100 days of guaranteed employment to every rural household, the National Rural Employment Guarantee Act (NREGA) can challenge the hegemony of landed elites as major employers in the Indian countryside. Using the colonial classification of landlord and non-landlord based land-revenue institutions in India, this paper provides a political economy explanation for regional variation in the labor market impact of NREGA. The extractive landlord-based system led to high inequality in landownership and political domination by a large landlord class. Comparing the labor market impacts of NREGA between the landlord and non-landlord districts in a difference-in-differences and triple-difference framework, we find that the provision of public employment under NREGA and correspondingly, its impact on rural wages is muted in landlord districts. In these districts, public employment under NREGA substitutes for self-farming but has no impact on private wage employment. However, the program is highly successful in raising wages by generating more public employment in non-landlord districts. In these districts, the provision of public employment under NREGA crowds-out labor primarily from unpaid domestic work, reflecting an increase in women’s participation in the program. These findings suggest that NREGA has not become a credible alternative to private employment in regions historically characterized by exclusionary economic and political institutions since large land-owning elites in these regions have managed to keep wages depressed by virtue of their position as major employers in the countryside.

No Employment without Participation: An Evaluation of India's Employment Program in Eastern Uttar Pradesh

This research, funded by a dissertation research grant from the American Institute of India Studies (AIIS), uses fieldwork data to understand the administrative and political challenges in the implementation of India's employment guarantee program - The National Rural Employment Guarantee Act (NREGA). At the national level this program has been highly successful in providing an income safety-net to small farmers and landless workers. However, in the poorer states of Uttar Pradesh, Bihar and Jharkhand the provision of public employment under NREGA has been inadequate. Using evidence from field research conducted with 950 households of NREGA beneficiaries in the Mirzapur district of Uttar Pradesh, this paper analyzes how awareness among program beneficiaries about their legal entitlements and at various levels of government determines the provision of NREGA employment in one of the poorest regions of the country. Further, we discuss the impact of NREGA on agricultural productivity and wage bargaining by landless workers who are the intended beneficiaries of NREGA. Our findings suggest that patron-client exchanges between the local elite and NREGA beneficiaries determine the provision of public employment and generate rents for the local elite. Therefore, there is urgent need for increasing transparency in NREGA provision and creating mechanisms to hold elected representatives and government functionaries accountable to NREGA beneficiaries.

Accumulation by Dispossession in Democracies: A Theoretical and Empirical Analysis of Land Acquisition in India

Forcible acquisition of agricultural land to facilitate accumulation by dispossession attempts like setting up of Special Economic Zones (SEZ) is fiercely resisted by farmers in India. These agitations may determine the political viability of governments. The ability of the state to enact and implement policies favoring accumulation by dispossession is determined by the political conflict between the elite and dispossessed farmers and landless agricultural workers. The outcome of this conflict is determined by the distribution of power in society and the success of different groups in mobilizing and enforcing their class interests. Using a model of the political conflict over land acquisition and a new data set compiled on SEZs that failed to acquire land from farmers, this paper shows that factors like inequality in land ownership (class) and hierarchies of caste and gender hinder the ability of small and marginal farmers from protecting their class interests even though they have de jure political rights and majority in the voting process. This paper shows that excessive political competition along caste and ethnic lines and greater inequality in landownership weakens the political power of farmers and reduces the probability of success of farmer movements. Finally, we find that the promise of formal employment and higher wages does not convince marginalized communities or educated farmers to support SEZs even when they face greater caste based discrimination in the traditional village economy.

Farmer Suicides in India: Trends, Patterns and Causes (with Deepankar Basu and Debarshi Das)

In an effort to understand the trends of farmer suicides, this article uses data from the National Crime Records Bureau to estimate the suicide mortality rate of farmers and non-farmers for India and its states. The methodology used corrects for an error present in previous studies and alters some commonly held views about the level and trend of farmer suicides in India.

BJP’s Youth Vote Dividend (with Deepankar Basu)

The Bharatiya Janata Party (BJP) swept the 2014 General Elections in India and emerged as a single party with absolute majority, a result not witnessed since 1984. Not only did it win a majority of seats, it also managed to increase its vote share in almost all states between 2009 and 2014. Using state-level data, we show that BJP’s extraordinary poll results relied crucially on attracting young, especially first time, electors.

The Role of Land Based Social Networks in Agrarian Productivity: The Case of Kenya (with Mwangi wa Githinji)

This paper classifies agrarian production related knowledge into ‘rival’ or ‘non-rival’ information and argues that large landowners may choose to systematically withhold information that is rival in nature and choose the level of dissemination of non-rival information as this creates rents for them. This forces small peasants to generally operate with sub-optimal information in addition to the traditional impediments like access to credit which is reflected in their choice of technique and labor supply decisions. This paper aims to explore the role of ‘sub-optimal information’ in explaining some of the productivity difference between small and large farms in Kenya. Using a simple model of relevant information transfer between social networks, we show that if the size of landownership determines social networks and information is not allowed to freely travel across networks, yields may differ significantly between members of different social groups. Further, we show that not only is the dissemination of knowledge sub-optimal but if there is cooperative information transfer between the rich and the poor farmers, both can attain higher profits.

Impact of Air Pollution on Labor Supply in the Informal Sector: Evidence from India (with Uttara Balakrishnan)

There is a well documented relationship between air pollution and an individual’s health. In this study, we examine if high levels of air pollution can have significant impacts on time spent in informal urban labor markets. We estimate the effects of ambient air pollution on labor supply decisions in India using an instrumental variables strategy. Air temperature typically falls with altitude, but when a thermal inversion occurs, this relationship reverses, which results in a warm layer of air sitting above cooler air, trapping pollutants released near the surface.Correspondingly, we use thermal inversions as an instrument for air pollution. We show that high air pollution in the current year reduces time spent in informal self-employment and casual wage labor which adversely impacts earnings. Therefore, pollution imposes a double penalty on the urban poor as it increases their expenditure on healthcare while reducing their wage earnings. The main mechanism appears to be a physiological one wherein air pollution impacts cognitive function through its impacts on current year health. We find that air pollution in the previous year also impacts current year labor supply decisions.

Partition, Social Disharmony and Economic Growth in India

Can catastrophic events in history impact currents patterns of economic growth and create social distrust and disharmony? The Partition of the sub-continent on religious lines into independent India and Pakistan in 1947 led to the largest migration in human history which destroyed communities and fractured the social fabric of the sub-continent. This paper will estimate the impact of Partition and the ensuing communal tensions in explaining divergence in economic growth and public investment between states in India. Using the district level Census of 1931 and 1951 to trace population movement between India and Pakistan, we will examine the relationship between a higher outflow of migrants and state-level economic growth in present day India. We would expect out-migration and social discord to adversely impact economic growth and regional development. However, an alternative explanation may be that people migrated from states that were economically under-developed and characterized by social discord. Therefore, migration may be correlated with unobserved state-level characteristics which would bias our estimates. We will use an instrumental variables strategy to address this concern.