The Agricultural Wage Gap within Rural Villages

We use unique data on daily labor-market outcomes for Indian casual workers to study labor reallocation between agricultural and non-agricultural activities within rural areas. Controlling for both individual time-invariant attributes and time-varying shocks, we find that workers who switch sectors across years or even within a week can obtain 23% higher wages by taking non-agricultural jobs. We then estimate a discrete choice model of daily labor allocation that decomposes preferences for jobs into two types of disamenities, those associated with location and those associated with job characteristics, such as the difficulty of the work. We find that while costs of working outside the village are significant even within rural areas, disutility related to job characteristics of non-agricultural work is nearly the same in magnitude.