Push and (or) Pull? Drivers of Labour Force Participation in Indian Agriculture

Abstract

Labour force participation rate in the Indian agricultural sector is gradually declining. This paper wants to investigate the possible causes behind it. Here both possible push and pool factors behind this decline are considered simultaneously. Initially, on the basis of 70th round NSSO data on agricultural households, it is tested whether or not marginal farmers are enjoying comparative advantage during the time of getting employment in the agricultural sector as agricultural labourer. But as ‘decline’ is a flow concept, to investigate possible reasons behind this decline, we have considered six rounds state-level NSSO data on Employment Unemployment Survey of India and its 20 major states. Applying fixed effect panel data regression technique after considering state-specific possible factors, it is found that gradual decline of per capita land holdings is the major push factor responsible for gradual decline of labour force participation rate in Indian agriculture. Apart from that, other push factors like hike of real agricultural wage rate, improvement in education level of the agricultural households and pull factor like hike of non-farm real wage, employment opportunities in construction and other non-farm activities are found significant for gradual decline of labour force participation rate in Indian agriculture.