Distress diversification from farm to non-farm rural employment sector in the eastern region

Verma, B.N.; Neelam Verma

Indian Journal of Agricultural Economics 50(3): 422-429

1995


Accession: 002804153

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Abstract
A shift in the occupational structure of the rural workforce in eastern India from farm to non-farm activities has taken place in recent decades. This raises the question of whether the declining share of agriculture in employment reflects positive growth impulses being transmitted from the farm to the non-farm sector, or whether it is an outcome of excessive demographic pressure coupled with the inability of agriculture to further absorb the expanding labour force. The paper seeks to explain the working of linkages of poverty with excess labour, its zero sum productivity and extension of this linkage from the farm to non-farm sector. Data from various rounds of the National Sample Survey (NSS) spanning the period 1977/78-1987/88 are used in the analysis. A statistical exercise testing the 'residual sector hypothesis' is conducted using linear regression analysis. The strong association between unemployment rate and non-agricultural rural male employment may be due to the rising level of disguised unemployment in the traditional non-agricultural sector. From the results, the 'inter linkage hypothesis' is refuted and the 'residual sector hypothesis' is held to be more applicable in the Indian case.