Seasonal Liquidity, Rural Labor Markets, and Agricultural Production
- (pp. 3351-92)
Abstract
Rural economies in many developing countries are characterized by a lean season in the months preceding harvest, when farmers have depleted their cash and grain savings from the previous year. To identify the impacts of liquidity during the lean season, we offered subsidized loans in randomly selected villages in rural Zambia. Ninety-eight percent of households took up the loan. Loan eligibility led to increases in on-farm labor and agricultural output, driving up wages in local labor markets. Larger effects for poorer households suggest that liquidity constraints contribute to inequality in rural economies.Citation
Fink, Günther, B. Kelsey Jack, and Felix Masiye. 2020. "Seasonal Liquidity, Rural Labor Markets, and Agricultural Production." American Economic Review, 110 (11): 3351-92. DOI: 10.1257/aer.20180607Additional Materials
JEL Classification
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- Q11 Agriculture: Aggregate Supply and Demand Analysis; Prices
- Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics