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Employment Patterns and Income Formation in Rural Bangladesh: The Role of Rural Non-farm Sector

Wahiduddin Mahmud

 

Abstract

The rural non-farm (RNF) sector in Bangladesh provides employment to a large and growing proportion of the country’s labour force. The evidence presented in this paper suggests that the process of labour shift from agriculture to the RNF sector represents a precarious balance of the "push-versus-pull" factors that might have kept rural poverty situation from deteriorating, without making much improvement in the situation either. The expansion of low-productivity self-employment has been the major contributing factor in the sectoral transformation of the rural labour force. While the provision of such non-farm employment has been crucial for absorbing the growing numbers of landless rural workers, the labour shift may have created some degree of overcrowding in the low-productivity non-farm activities, thus undermining the growth of overall productivity and income levels in the RNF sector. In future, if the RNF sector is to play a more dynamic role, there will have to be probably some shift of emphasis towards relatively larger-scale and higher-productivity RNF activities which are better able to respond to income-elastic market demand.

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