Modernization and underemployment in a dual agrarian sector: The case of Brazil (1950–1980)

This paper presents a case study of employment trends in Brazilian agriculture between 1950 and 1980. Using primary data, I document the displacement of workers from large and mid-sized establishments and the expansion of self-employment in an increasingly fragmented smallholding sector. I compute novel measures of rural population and find significant corresponding trends in employment-to-population ratios, thus contributing new evidence of the persistence of rural underemployment in a period of fast industrialization and growth. I conclude by examining the main rural development policies adopted in the period within a coherent framework for understanding the adoption of technical innovations. I argue, in particular, that the State concentrated price and credit subsidies on large and mid-sized producers and neglected investments in research, extension, and rural infrastructure. This policy mix interacted with Brazil’s dual agrarian structure and enhanced the incentives for the adoption of labor-saving innovations.