Oligopsonistic landlords, segmented labor markets, and the persistence of tied-labor contracts

This article examine,, contractual labor arrangement,, in agrarian economies that persist as a consequence of market power on the part of landlords faced With Output uncertainty. We show that a segmented labor market characterized by tied-labor contracts and involuntary unemployment in the lean season are optimal as compared to a labor hiring arrangement that guarantees full employment of labor in both seasons. Government intervention in the form of it specific subsidy targeted toward the hiring of permanent laborers may raise the welfare of all laborers while a specific Subsidy directed toward the hiring of casual laborers or the institution of relief programs that absorb the rural unemployed in the lean season leads to the casual laborers ill the economy being Worse off.