Journal of New Economy (Oct 2021)
Agricultural labour in transition: An update
Abstract
The economic transformation process in Europe and Asia differed remarkably across countries, last but not least, with respect to agricultural labour use. While the structural change in some countries followed theoretical expectations and was characterised by a drastic reduction in agricultural employment, other countries experienced an increase in agricultural labour force. Against this background, the paper aims at analysing the determinants of the change of agricultural employment across a panel of formerly centrally planned economies with a particular focus on institutional factors. The analysis builds upon the theories of structural change and new institutional economics and relies on a set of econometric methods. To explain annual intersectoral labour flows, random-effects panel data models are used. Sectoral labour adjustment is measured by the difference between growth rates of agricultural and non-agricultural employment between 1990 and 2019 for a panel of 31 transition countries. The authors direct particular attention to the role of land ownership and transfer rights, which is operationalised by an updated and extended indicator of land relations. Similar to previous studies the classical determinants, such as the ratio of average income per worker in the non-agricultural sector over agriculture, the relative size of the agricultural sector or the development of relative prices, are positively correlated with a shift of labour out of agriculture. The findings suggest furthermore that occupational migration increased with a liberalisation of land transfer rights, in particular during the first two decades of transition. Land rental or sales agreements allow land owners to earn an income from their asset while working outside of the agricultural sector. Contrary to expectations based on economic theory, improved ownership rights seem to reduce labour outflow from agriculture. The results underline that institutional factors play a role in structural change. Deeper analyses of the incentives related to improved tenure rights for occupational change require individual level data.
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