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Labour Market Characteristics in Rural Bangladesh After the 1998 Flood

Carlo del Ninno
International Food Policy Research Institute, 2033 K Street,N.W., Washington, DC 20006 USA

Dilip K. Roy
Bangladesh Institute of Development Studies, Dhaka, Bangladesh.

Abstract/ Executive Summary:

This paper is one of the few attempts to describe and analyze labor market issues relative to labor market participation and labor supply and demand for labor in rural Bangladesh at the time of the 1998 flood. It presents empirical estimates of the supply function of daily laborers and of the demand for labor in crop production using a panel data set of 750 households. The findings reveal a labor market characterized by low participation rate and low overt unemployment. The participation rate of females is particularly low and may be explained in part by the involvement of a large majority of females in housework and in school (for 10-14 years old). Among those who participate in the labor market, more than one-third were found to be daily laborers, who were mostly males aged between 25 to 54 years earning a daily wage rate varying from Tk. 55 to Tk. 60 including meals. The analysis of the demand for labor shows that hired labor was one-third of all labor used in the rural agricultural labor market and larger farmers (with 150 or more decimals of land) used more hired laborers than smaller farmers (with less than 50 decimals of land). Total labor use as well as labor demand per acre also increased from November '98, just after the flood to round 2 April, and the loss of labor demand suffered during the period of the flood was offset, at least to some extent, by higher demand and higher earnings in the period after the flood.

Keywords: Labour market, Rural Bangladesh, Flood

Location:

Start Date: 00-10-1998

End Date: 00-12-1999

Program Area: Socio-economic and Policy

Non-commodity: Performance

Objectives:

To describe the labor market situation in rural Bangladesh in terms of the individual participation in the labor market and the labor supply on one hand and the analysis of demand for labor

Methodology:

The data used for the analysis reported in this paper consist of a survey of 757 households that have been interviewed three different times in seven flood affected thanas of the country. The data were collected in October-November, 1998, April-May, 1999, and November- December, 1999. The data contain detailed information on all household members, including labor participation, main type of employment (such as dependent worker, daily labor, self- employment in business and cottage activities and own farm), days worked in each type of jobs and earnings starting a year before the flood in July, 1997, until a year after the flood in December, 1999. Therefore, it allows a good comparison across different' seasons and economic situations .

Source of Information: Bangladesh J. Agric. Econs. XXIV, 1 & 2(2001) 75-99

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

The labor market in rural Bangladesh is characterized by low participation rate and low official unemployment rate. The participation rate of women is much smaller than that of men since most women are still working in the home and do not participate in the labor market. The results of the model of determinants of labor participation, comparable to those reported in the literature, confirm that land and other assets have a negative effect on labor participation. We also found that a small increase in education has a positive impact on male labor participation and that more years of schooling have a positive impact on female participation. The analysis of the activities performed by the people working show a predominance of male daily laborers followed by self-employment and cottage activities. Unfortunately, people working as daily laborers are paid lower wages than other workers and are subject to large seasonal variations and suffer reduced employment and lower salaries at times of economic contraction. After the 1998 flood, job opportunities and earning of daily laborers decreased. One year after the flood, job opportunities and wages were still lower than in the same period a year before the flood. In the winter after the flood (April-May 1999), the increase in economy activity and a significant expansion of the agricultural production of boro rice and other crops that spurred an increase in the demand for labor and resulted in an increase in labor participation and earnings. The analysis of the demand for labor shows that all farmers of different landholdings rely on hired labor for their production needs, albeit in different proportions. In the areas where the flood had a worse impact, we noticed an expansion in the production of boro rice and an increase in the demand for labor. In conclusion, it appears that the labor market in rural areas of Bangladesh is dominated by male daily laborers that are subject to the seasonal variations of demand and that may be subject to further reductions in labor demand caused by disasters and other shocks. There is also a concern for the female workers. Their participation is small and often they participate in the production process as unpaid family labor. The challenge of improving the labor participation of a growing active population can only be met by an increase in opportunities in off-farm and cottage activities, since off-farm activities grow at a faster rate and provide employment in the agricultural sector. These activities can include sericulture, horticulture, reforestation and watershed development for rain fed areas. This means that infrastructure, training and credit opportunities need to be available and that literacy and education have to be expanded to provide a more efficient labor force.

Knowledge Management: Journal