Demand for Labour and Wages in Punjab Agriculture

The recent farm level changes in crop sector employment in Punjab have been analysed by decomposing these changes into crop pattern, cropped area and technology effects and the determinants of labour demand and wages have been estimated. The study is based on data pertaining to the period 1981-82 to 2005-06 obtained from “Comprehensive Scheme for Studying the Cost of Cultivation of Principal Crops in Punjab”. A decline in human labour-use has been witnessed on Punjab farms by 25 per cent, largely due to use of labour-substituting technology, including tractors and harvesting combines. There is an increase in the casualization of labour-use. Contrary to the expectations, the rise in wage rate is not associated with land productivity but is largely influenced by inflation and output prices. The wage rate elasticity to output price and CPIAL has ranged between 0.64 and 0.81 for rice and wheat. The study has emphasized that the future growth in rural employment can come from either the non-farm sector or diversification of the crop pattern in favour of vegetables and other labour-intensive crops.