Fragmented rural labour markets

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Abstract
Rural labour markets in India and elsewhere are fragmented by villages. This article analyses inter‐village mobility barriers, insider‐outsider differentiation and the nature of the intra‐village labour exchange. Unemployment reduces the opportunity cost of labour to peasants below an institutionally‐determined wage while lack of ‘familiarity’ raises the cost of recruiting and employing non‐village labourers to village employers above that wage. Hence, patron‐client relations between village employers and employees benefit both and will be the characteristic form of labour exchange. Under appropriate conditions, sharecropping may also emerge as a way of organising production and of sharing the rents within villages.

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