Creating Labor Markets in Rural Tanzania

Labor is by far the most abundant and important factor in rural economies of developing countries. Inefficient labor markets could interfere with the adoption of agricultural technologies, and misallocation of labor implies that some farmers use too much labor input, while some other farmers use too little on their farms. This project experimentally tests the sources of inefficiency in agricultural labor markets in rural Tanzania, and the effectiveness of introducing either casual job information sharing via text messages, hiring loans, or both. The project will examine outcomes that result from these interventions, measuring farmers’ labor market participation rate and relative total farm labor input usage. The welfare of farmers will be understood at this pilot stage by asking respondents to report their food consumption patterns as well as the time spent on searching for jobs (or workers). Finally, agricultural output at the village level will be collected, which is expected to be higher in treatment villages if in fact there was misallocation of labor before the interventions were introduced (i.e. farmers might have been using too much or too little labor on their farms than necessary). Results forthcoming.