Production and Distribution In a Single Crop Economy
An Alternative Approach to the Analysis of Labour Contract in Traditional Agriculture

Sajjad Zohir
Thesis Paper

The literature on agricultural contracts has shed much light on the choice of contracts in the presence of risk, transaction costs, and incomplete markets. There is, however, no satisfactory explanation of the coexistence of positive wages and open unemployment. Furthermore, the historical changes in the incidence of various agricultural contracts remain largely unexplained. These shortcomings are argued to be partly rooted in the conventional assumption on agricultural technology that defines output to be a continuous and (strictly) concave function of homogeneous inputs.

Since operations in crop production are sequential over time,it is necessary to distinguish between operation‑specific inputs (especially labour). A single (rice) crop economy is discussed to suggest the prevalence of fixity in factor‑proportions. It is also suggested that operation periods are of finite lengths so that operation‑specific relations between the number of labourers and land may be derived. The need to incorporate uncertainty in labour use (especially, during pre­ harvest operations), ignored in the literature, is also emphasized.

These assumptions on technology are shown to be useful in explaining the relationships between farm size and land productivity, the choice of inputs, and the coexistence of (seasonal) open unemployment and positive wages. Inquiry into the time dimension of labour contracts suggests that it is necessary to explicitly identify how the non‑crop affects the crop sector through the labour market. Determination of wages in the presence of a non‑crop sector is discussed to suggest longer term (operation periods/crop year) labour contracts are more likely than daily contracts under stable economic situations. In the of non‑crop sector, it is argued that labour contracts for periods shorter than a crop year may not be defined. Such a closed economy with sharecropping and surplus land is modelled to provide a plausible economic‑demographic explanation of why cultivators across of different land fertility may have received similar shares in agricultural societies.

The Concluding chapter considers the validity of the results derived for a crop economy in a multiple crop setting. It also notes some implications of the alternative construct for formal economic analysis.