The intertemporal evolution of agriculture and labor over a rapid structural transformation: Lessons from Vietnam

Abstract

Highlights The rural economy has increasingly diversified into the non-farm sector nationwide. Real wages have increased rapidly and the inter-sectoral wage gap has widened. Small farm sizes have not obstructed mechanization nor the uptake of labor-saving pesticides. The longstanding inverse farm size-yield relationship has steadily attenuated over time. Human capital accumulation is the key correlate of improvements in rural household well-being.

Viewpoint: The future of work in agri-food

“…As rural-urban migration expands, greater urban income earning opportunities become the main driver of agricultural wages. Higher wages induce farmers to mechanize and substitute capital for labor, as has now also been observed in (land scarce) Vietnam ( Liu et al, 2020 ).…”

“…Fifth, sociodemographic changes, including decreasing fertility rates, rising rural schooling levels, and increasing participation of women in the rural workforce, further stimulate labor to move from farm to the non-farm AFS as well as to non-AFS jobs. Liu et al (2020) , for example, find that, in Vietnam, the potential for agriculture to address youth unemployment is limited. However, as wages converge between rural and urban sectors, the rural economy is diversifying into non-farm activities, and access to education (rather than access to land) has become the key driver of improvements in rural household well-being.…”

Are small farms more performant than larger ones in developing countries?

“…As shown for many countries in Asia, increasing real agricultural wages over the course of those past two decades, along with absorptions of labor into nonagricultural sectors, induced substitution of labor by machine, mainly through machine rental or service providers [for the Philippines ( 75 , 76 ), Indonesia ( 77 ), Vietnam ( 37 , 78 ), China ( 79 ), India ( 28 ), and Bangladesh ( 38 )]. As a result, the productivity advantage of smaller farms (IR) diminished and, in some cases, even reversed, increasing operational farm size among farmers through land rental markets as well.…”

The Future of Work in Agriculture: Some Reflections

“…Socio-demographic changes, including decreasing fertility rates, rising rural schooling levels, and increasing participation of women in the rural workforce, further stimulate labor to move from farm to non-farm AFS as well as to non-AFS jobs. Liu et al (2019), for example, find that, in Vietnam, the potential for agriculture to address youth unemployment is limited. However, as wages converge between rural and urban sectors, the rural economy is diversifying into non-farm activities, and access to education (rather than access to land) has become the key driver of improvements in rural household well-being.…”