Specific Experience, Household Structure, and Intergenerational Transfers: Farm Family Land and Labor Arrangements in Developing Countries

Abstract

Data from Indian rural household survey was used to test th hypothesis that the coexistence in traditional rural societies of extended intergenerational families infrequent land sales and high reliance on family members as farm laborers is the result of the economic advantages which accrue from the knowledge gained by farming a particular ploy of land over a long period of time. The land specific experience of elderly members of a intergenerational household who farmed the land as a child and then as an adult are expecially critical in adverse weather years. Most previous investigators attributed the existence of multigenerational households the use of family members rather than hired laboreds and the infrequency of land sales to deficiencies in the market i.e. labor market imperfections and an absence of capital insurance and asset markets. In the present investigations these same characteristics are viewed as having an economic advantages. A model for estimating the contribution of the experience of the elderly household members to agricultural profits was developed and applied to data from a 3-year panel study of 2900 Indian rural farm households. The data was collected between 1968-71 by the National Council of Applied Economic Research. The survey collected information on farm profits farm inputs demographic characteristics and the effects of weather conditions on profits. A major limitation of the study was a lack of information on the duration of land ownership. Age of household members was substituted as a proxy for duration of ownership. Findings were consistent withe the hypothesis. In poor agricultural years gross returns for households which contained an elderly household member were greater than the gross returns for comparable households which did not contain an elderly member. The economic advantages of specific knowledge embodied in the experienced elderly farmer were comparable to the economic advantages which accrued to households whose members were more educated. The hypothesis cannot fully explain the existence of intergenerational families since there is a relatively large proportion of such families among nonfarm families in many countries including India. Findings suggest that intergenerational families may provide for more occupational diversity and thereby reduce income risks. The specific experience hypothesis has policy implications. If technological changes are introduced the value of specific experience may be lost and the frequency of intergenerational households may decline. The hypothesis may also explain why farmers are reluctant to agree to land redistribution and consolidation schemes. This reluctance may disappear after sufficient technological change has occurred.