Participation rates, efficiency, and characteristics of workers

The paper first describes the South Indian village and the data set used in the analysis, and discusses important methodological issues, such as the features of the chosen econometric model and the related diagnostic tests. The next section presents an outline of a simple theoretical model which serves as a motivation for the paper"s empirical analysis. The results of the analysis, and their implications in understanding the efficiency of workers in terms of their personal and household characteristics, are then discussed. The findings are in line with the existing literature on rural labor markets in developing countries, especially concerning the propositions of efficiency wage theory. The paper provides consistent evidence linking nutritional status to labor participation, demonstrating that the undernourished poor are caught in a vicious cycle because employers are less willing to hire them. Therefore, some external assistance is needed to provide nourishment to get these workers back into the labor market. The study also demonstrates that the efficient application of existing analytic tools to available data to examine complex relationships within the labor market pays off, by producing valuable results for policy formulation. (Author abstract, modified)