Wage determination in agricultural labour markets under monopsonist labour-tying arrangements

There is need for a study of wage formation in agricultural labour markets which can simultaneously explain the existence of involuntary unemployment on the one hand, and responsiveness to market forces on the other. This paper offers an analysis and empirical study of wage determination in a typical rural agricultural setting, and finds that, based on the notion of efficiency wages, a two-tier situation explains why rural wage rates are known to vary widely among workers and across regions.