Essays on Agricultural and Labor Markets in India

This dissertation consists of three empirical essays on agricultural and labor markets in rural India. Chapter 1 estimates the role of improvements in transport infrastructure on households' production decisions in agriculture. The Central Government of India launched a large-scale rural road-building program in 2000, targeting villages that lacked any single all-weather connectivity. Strict guidelines governed eligibility and timing of program road provision. I exploit the precise timing of road construction as a source of exogenous variation in connectivity using a household-level panel in a difference-in-differences framework. I find that households who gain access to improved rural road infrastructure diversify their crop portfolio, increase take up of complementary productive inputs and intensify labor hiring. Households subsequently enter into the sales of farm output, indicating a transition from subsistence to market-oriented farming. Evidence from a field survey suggests that these effects operate through an increase in mobility of agricultural workers across connected village labor markets. These findings emphasize the substantial barrier to productive investments in agriculture generated by poor rural road connectivity that hampers the integration of labor markets across space. Chapter 2 (with Emily Breza and Supreet Kaur) investigates whether worker utility is affected by co-worker wages, which has potentially broad labor market implications. In a month-long experiment with Indian manufacturing workers, we randomize whether co-workers within production units receive the same flat daily wage or different wages (according to baseline productivity rank). We find that for a given absolute wage, pay inequality reduces output and attendance by 0.24 standard deviations and 12%, respectively. These effects strengthen in later weeks. Pay disparity also lowers co-workers' ability to cooperate in their self-interest. However, when workers can clearly observe productivity differences, pay inequality has no discernible effect on output, attendance, or group cohesion. Chapter 3 uses experimental evidence to understand the impacts of providing workers with meaningful short-term employment during the lean season in agriculture. I randomize job offers among Indian agricultural workers who express interest in a month-long employment opportunity in low-skill manufacturing, and I follow these workers several weeks after the employment opportunity concludes. I find reductions in labor supply and gains in consumption among workers who received job offers. These effects are concentrated among landless workers, suggesting that employment provision during the lean months alleviated a binding constraint for this subgroup.