Dwayne Benjamin

Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models

This paper tests the separation of farm labor supply and labor demand decisions, using the observation that household composition is an important determinant of farm labor use with nonseparation. After assessing the conditions under which the test has power against several alternatives, an empirical model is developed to test the proposition that farm employment is independent of family composition. The model is estimated on a data set from rural Java. The null hypothesis that farm labor allocation decisions are independent of household structure is not rejected. The results are robust to different specifications of the labor demand function. Copyright 1992 by The Econometric Society.

The Determinants of Success in University Introductory Economics Courses

Performance in and propensity to complete the college introductory economics courses are shown to be related to student preparation and performance in high school, with calculus and overall grade average being especially important.

The Evolution of Income Inequality in Rural China

In this article we analyze trends in income inequality and the distribution of income in rural China from 1987 to 1999. We find an uneven but long‐run increase in inequality in rural China and show that nearly half of the rural population was not much better off in 1999 than at the start of the period. We rule out geography as the most important factor for explaining income differences and the increases that occurred over time. Much more important were growing differences between households living in the same village, province, or region. We also find that access to nonagricultural incomes from local wage employment and family businesses contributes to inequality but that employment outside the county in which a household lives and accessed through temporary migration is relatively equalizing. Finally, we document important strengths and weaknesses of the primary data set used for our analyses relative to other data sources available for study of inequality and poverty in rural China.

Can unobserved land quality explain the inverse productivity relationship

Abstract An inverse relationship between both farm productivity and labor intensity, and farm size, is a common empirical finding in developing country agriculture. The traditional explanation has been imperfect labor markets. Recently, it has been suggested instead that the inverse relationship is a statistical artifact resulting from omitted land quality. Using a farm-level data set from Java, I investigate whether omitted variable bias can explain the inverse relationship. I show that the inverse relationship and accompanying wage responses are inconsistent with a model of neoclassical farm behavior that ignores omitted variable bias. Instrumental variables techniques yield parameter estimates in which the inverse relationship is eliminated and the estimated wage elasticities are more in line with economic theory. Further econometric investigation hints that a model of omitted land quality may be a possible source of the inverse relationship. These results emphasize the importance of considering the sources of cross-sectional variation in estimating microeconomic relationships.

The Highs and Lows of the Minimum Wage Effect: A Time-Series Cross-Section Study of the Canadian Law

We examine the effects of minimum wage legislation in Canada over the period 1975–93. For teenagers we find that a 10% increase in the minimum wage is associated with roughly a 2.5% decrease in employment. We also find that this result is driven by low frequency variation in the data. At high frequencies the elasticity is positive and insignificant. The difference in the elasticity across the bandwidth has implications for the interpretation of employment dynamics as a result of minimum wage policy and experimental design in minimum wage studies. It also provides a simple reconciliation of the “new minimum wage research,” which reports very small negative, or positive, elasticities.

Property Rights, Labour Markets, and Efficiency in a Transition Economy: The Case of Rural China

We investigate the consequences of imperfect factor market development for farm efficiency in North China. We estimate the extent to which an inverse relationship in farm productivity can be attributed to the administrative (as opposed to market) allocation of land, combined with unevenly developed off-farm opportunities. Using a new household survey, we find considerable inefficiency in the use of labour. This inefficiency is alleviated by external labour markets and, to a limited degree, by administrative reallocations. The reallocations do not go far enough, however, which raises important questions about constraints on rental activity and property rights formation more generally.

Agriculture and Income Distribution in Rural Vietnam under Economic Reforms: A Tale of Two Regions

This paper exploits the panel dimension of the Vietnam Living Standards Survey (VLSS) in order to analyze the main changes occurring in agriculture in Vietnam over the period 1993-1998. This period was marked by a continuation of the reforms that began in 1988 with the implementation of Resolution 10, Vietnam s own version of the Chinese Household Responsibility System. We focus on the impact of two main policy changes: first, the increase in the rice export quota and the significant increase in the price of rice, especially in the south; and second, the liberalization of the fertilizer market and the sharp drop in the price of fertilizer. To this end, we document changes in the empirically observable institutional environment, exploring changes in rice and other crop prices as well as fertilizer prices. With this as background, we examine changes in rice production, consumption and marketing, and their links to changes in prices and incomes. We also estimate the degree to which these increases can be explained by increased use of inputs like fertilizer, cropping intensity, and increased yields. Finally, we investigate the distributional impacts of these changes, including a detailed examination of the linkages between rice marketing and income distribution using nonparametric econometric techniques. We find that the agricultural reforms had a largely beneficial impact on the well being of rural households throughout Vietnam, but that farmers in the south gained most, consistent with expectations given the policy changes. More generally, our conclusions suggest that market reforms can have a significant impact on incentives, without adverse consequences for income distribution.

Income Inequality During China's Economic Transition

This paper provides an overview of the evolution of income inequality in China from 1987 to 2002, employing three series of data sets. Our focus is on both urban and rural inequality, as well as the urban-rural gap, with the objective of summarizing several “first-order” empirical patterns concerning the trajectory of inequality through the reform period. We document significant increases of inequality within China’s urban and rural populations. In rural areas, increased inequality is primarily related to the dis-equalizing role of non-agricultural self-employment income and slow growth in agricultural income from the mid-1990s onward. Poverty persists, and tied in part to slow growth in agricultural commodity prices. In urban areas, the declining role of subsidies and entitlements, the increase in wage inequality and the layoffs during restructuring, have fueled the growth in inequality within urban areas. Poverty levels, however, are very low. We find that spatial (regional) dimensions of inequality are significant, but are much less important than commonly believed for both the urban and rural populations, and for differences between urban and rural areas. Accounting for urban-rural reclassification, which otherwise exaggerates the rising urban-rural gap, we find a relatively stable ratio of urban to rural incomes. This hides some geographical variation, however: The urban-rural gap is increasing more rapidly in interior provinces, where SOE’s had a more dominant role in economic activity in urban areas, than in coastal provinces where the non-state sector was more important earlier in the reform period.

How do retirement tests affect the labour supply of older men

Abstract We analyze the sequential elimination of retirement/earnings tests from Canadas public pension plans. Our empirical framework potentially overcomes the obstacles encountered analyzing the tests within the context of a national social security system. Our results indicate that the removal of the tests were associated with relatively large shifts from part year full time to full year full time work. We are unable to reconcile these results within the context of a traditional labour supply model. Instead, they are consistent with a model which incorporates fixed costs of work, or labour market rigidities which preclude continuous reductions in labour supply around retirement.

Early Retirement Provisions and the Labor Force Behavior of Older Men: Evidence from Canada

We examine the (sequential) introduction of early retirement provisions to Canadas two public pension plans. These reforms provide a unique opportunity to assess the effect of public pension plan parameters on labor supply behavior, free of the biases that potentially affect the simple time‐series or cross‐section inference presented in many previous studies. We find that the reforms led to an increase in pension receipt but had little immediate effect on labor market behavior. This is due to the fact that men who initially took advantage of the early retirement provisions would otherwise have had limited labor market participation.