Shadow Wages and Peasant Family Labor Supply: An Econometric Application to the Peruvian Sierra

摘要

A striking feature of developing economies is the large proportion of the work force that is self-employed. Lack of widespread labor market participation in the agricultural sector can pose a major obstacle to the empirical implementation of economic models of the peasant household, whether because wage data are simply not available, or because the assumptions required to make use of wage data stretch the bounds of credulity. The paper develops a methodology for estimating a structural labor supply model for primarily self-employed peasant households, which holds under a general agricultural technology and set of labor market conditions. The unique feature of the approach is that the opportunity cost of time, or shadow wage, of household workers is explicitly estimated from an agricultural production function and is subsequently used to identify a set of structural labor supply parameters. Recent household survey data from rural Peru is employed to estimate and perform various diagnostic tests on the model. (Copyright (c) 1990 The International Bank for Reconstruction and Development/THE WORLD BANK.)