Abstract
Using micro-level farmer expenditure surveys, this article studies the insurgency in the Punjab region of India, thought to have cost over 20,000 lives. It finds that the violence is statistically associated with an 11.4 percent decline in spending on permanent agricultural labor but did not have a statistically significant effect on the use of temporary labor. Moreover, insurgency-related violence likely signaled an increase in future kidnappings of farm labor and may have incentivized labor away from longer duration contracts. Richer farmsteads appear to be more sensitive to insurgent violence than poorer ones in reducing their labor spending.
Highlights
The article reports on a study on how insurgent violence has affected certain laborrelated choices by farming households in rural Punjab, India
It finds that an increase in insurgent activity is linked with a decline on spending on permanent farm labor. It finds an increase in kidnappings and abductions, suggesting that violence and extortionary crime were sequenced complements during the Punjab insurgency of the 1980s
A second implication is that the police should have been more active in areas where there are richer farmers and in the districts bordering Pakistan where the levels of insurgent violence were high (Figure 1)
Summary
The article reports on a study on how insurgent violence has affected certain laborrelated choices by farming households in rural Punjab, India It finds that an increase in insurgent activity is linked with a decline on spending on permanent farm labor. A review of more than 300 studies published from 1970 to 1989 showed that 80 percent of those that studied distributional effects of the new technology found increases in both interfarm and interregional inequality.19 From this and the companion article, we learn that violence has had an adverse effect on both physical investment decisions as well as on permanent labor spending decisions. This article provides evidence for an 11.4 percent decline in spending on permanent labor but not on casual labor It does so through the use of micro-level farmer expenditure surveys using district and year-fixed effects. Future work may try to further delineate the channels associated with the dichotomous result, trying to more fully understand labor demand and labor supply before, during, and after periods of extended violence
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