Fragmented rural labour markets

Abstract

Rural labour markets in India and elsewhere are fragmented by villages. This article analyses inter‐village mobility barriers, insider‐outsider differentiation and the nature of the intra‐village labour exchange. Unemployment reduces the opportunity cost of labour to peasants below an institutionally‐determined wage while lack of ‘familiarity’ raises the cost of recruiting and employing non‐village labourers to village employers above that wage. Hence, patron‐client relations between village employers and employees benefit both and will be the characteristic form of labour exchange. Under appropriate conditions, sharecropping may also emerge as a way of organising production and of sharing the rents within villages.

Notes

Boston University, Boston, MA. I am grateful to Sara Berry, Terry Byres and Gill Hart for their comments on an earlier draft of this article, but I have not been able to implement all of their thoughtful suggestions for improving it. I remain responsible for any errors.