Abstract
Interlinkage between labour and credit markets is interpreted as a consequence of a monopolistic moneylender's attempt to extract consumer's surplus from the borrower by levying a two-part tariff. This analogy enables us to draw on the literature on non-linear pricing to high- light issues in agrarian structure. The consequence of policy interventions, like taxes and minimum wage legislation, is studied. It is shown that the moneylender will charge ‘usurious’ interest rates if wages are rigid downwards or there is a tax on agricultural income or borrowers have heterogeneous preferences. Some geometry for analysing interlinkage is developed and used for deriving some of the results.
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