Labor Supply, Total Land Rents, and Agricultural Output in Backward Countries

Abstract

Most poor and backward countries have large agricultural sectors. The peasant families that farm usable land may be tenants paying rent (usually some share), they often are owner-cultivators, and occasionally they are more substantial farmers hiring field hands. Each of these institutional arrangements may affect the availability of labor hours worked, hence total output of agriculture, and explicit or implicit rent payments. Deduction suggests that subsistence farming by owners will occasion less output than when explicit wages are paid for hired labor. It also appears that a higher minimum wage for agricultural labor can result in greater output but lower aggregate rents. An incidental finding is that, assuming diminishing returns, the magnitude of total land rents depends in part upon the intra-marginal shape of the supply curve of labor. The basic theme is that rents depend on output, and hence on employment, which in turn is determined by aggregate labor supply as influenced by land tenure arrangements.1