Specific experience, household structure and intergenerational transfers; farm family land and labor arrangements in developing countries
Rosenzweig, M.R.; Wolpin, K.I.
Bulletin, Economic Development Center, Department of Economics/Department of Agricultural and Applied Economics, University of Minnesota (84-3): 38
1984
DOI: 10.1093/qje/100.supplement.961Document Number: 411957
An overlapping generations model incorporating returns to specific experience is used to demonstrate how three salient phenomena in land-scarce developing countries, the predominance of intergenerational family extension, cost advantages of family relative to hired labour, and the scarcity of land sales, may be manifestations of an optimal implicit contract between generations which maximizes the gains from farm-specific, experimentally obtained knowledge. A method for estimating the contribution to agricultural profits of the farm experience embodied in elderly kin based on a 3-year panel of household data from India is proposed and implemented. Implications of the theory for market transactions in land and for family extension are also tested using individual farm data and time-series information on rainfall.