Labour Allocation Decision of Rice Farming Households in Bangladesh

Abstract

This paper investigates the factors affecting the labour allocation decisions of rice‐producing households in Bangladesh. A farm‐household model has been used to explore the household decision‐making mechanism. We use a primary questionnaire survey, and a Generalised Ordered Logit model is used to identify the factors affecting the sample households' likelihood of choosing different labour regimes, assuming hiring‐in is the top ordered alternative, followed by self‐cultivator and smallholders. Results show that one more year of schooling of the household head increases the likelihood of choosing the hiring‐in category against the lower‐ordered choices by 25 per cent. Having more cultivated land substantially improves the propensity of a household to hire labour versus selling labour or self‐cultivation (odds ratio 11.68). If a household lives a kilometre further from the Upazila headquarter, it is 11 per cent more likely to hire labour than being either a smallholder or self‐cultivator, which might be a result of the larger availability of labour in those areas. Additionally, an increase in the number of visits by agricultural extension officers reduces the household's likelihood of hiring labour by almost 21 per cent while making the households more likely to be self‐cultivators.