Seasonal Liquidity, Rural Labor Markets, and Agricultural Production
Günther Fink, B. Kelsey Jack, Felix Masiye
American Economic Review · 2020 · Volume 110 · Issue 11
Abstract
Rural economies in many developing countries are characterized by a lean season in the months preceding harvest, when farmers have depleted their cash and grain savings from the previous year. To identify the impacts of liquidity during the lean season, we offered subsidized loans in randomly selected villages in rural Zambia. Ninety-eight percent of households took up the loan. Loan eligibility led to increases in on-farm labor and agricultural output, driving up wages in local labor markets. Larger effects for poorer households suggest that liquidity constraints contribute to inequality in rural economies.
Keywords
Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Products, Economic Development: Human Resources, Human Development, Income Distribution, Migration, Economic Development: Urban, Rural, Regional, and Transportation Analysis, Housing, Infrastructure, Agriculture: Aggregate Supply and Demand Analysis, Prices, Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets, Urban, Real Estate, and Transportation Economics: Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
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