Neoclassical Theory and the Optimizing Peasant: An Econometric Analysis of Market Family Labor Supply in a Developing Country

Abstract

Few attempts have been made to test empirically the multitude of models formulated to describe household labor supply behavior in the context of rural labor markets in developing countries. In this paper refutable predictions are derived from a neoclassical multi-person household model based on competitive assumptions modified to take into account differences in landholding status. A national sample survey of rural households from India is used to estimate the parameters of the model for male and female agricultural workers from farm and nonfarm households. The estimates generally conform to the implications of the neoclassical-competitive framework.