Mechanization and Disguised Unemployment in Agriculture- a Case Study of Punjab

Abstract

Agricultural mechanization implies the use of various power sources and improved farm tools and equipment, with a view to reduce the drudgery of the human beings and draught animals, enhance the cropping intensity, precision and time lines of efficiency of utilization of various crop inputs and reduce the losses at different stages of crop production. By definition it replaces human and animal labor with machine power, with the motive of cutting the cost of production in two ways- increasing productivity per head and secondly, by economizing on labor. Thus large scale mechanization leads to large displacement of labor. The gravity of the displacement effect of mechanization surmounts to the fact of considerable dependence on agriculture for employment and abundant supply of labor along with inadequate alternative employment opportunities for the agriculture laborers. This leaves the displaced labor redundant and get disguisedly unemployed on their small farm due to skill barriers to enter other activities and time lag to get an alternative employment opportunity. It can be hypothesized that large farmers are commercialized, mechanized farms, mainly employing hired/casual labors, and employ labor to the profit optimization level. The small farms are considered to be family farms, where household and production activities are fused, and aim to optimize revenue per head of the member. Thus the study here conceptualizes the difference in the rationality on hiring labor by the two sets of farm operators which worsens the displacement effect of the mechanization on labor, as labor displaced from the large farms resorts to their family farms for employment, thus affecting the overa11 productivity. The empirical study done here pertains to Punjab and analysis for effect of mechanization on labor is done at block level. The Cobb Douglas production junction is then used to compare the marginal and average contribution by the labor on the two set of farm holdings. Interestingly, result shows significant variations between large and small fans, along with the fact that large amount of labor was displaced in the state in the period under consideration.