Labor Productivity, Underemployment and Rural Migration in Iran

Abstract The relationships among labor productivity, underemployment and small farmers' migration decisions in Iran were studied. The results of budgeting and production function analysis indicated that the MVP (marginal value product) of hired labor is above the real wage rate and that of family labor is well below it. Despite high underemployment and low marginal productivity of farm labor, families on small holdings stayed and produced so long as the average value product of their labor equaled or exceeded their opportunity cost of remaining on the farm. Given the social cost of maintaining migrants and the negative impact of migration on agricultural output in some regions, policies to raise labor productivity and reduce rates of rural-urban migration for less-developed countries are proposed. Arabic Abstract: