Structural Changes of Farm Size and Labor’s Occupation in Bangladesh- A Markov Chain Analysis

Abstract Over the last few decades, Bangladesh has experienced significant structural changes within the agricultural sector. This research estimates the current and forecasts the future changes of farm size and labor occupational mobility over time and across the region. A panel dataset, which is used in this study, was collected in the three different years (1988, 2000 and 2008) from 62 villages across 57 districts. Stationary Markov chain approach was used in this analysis to estimate structural change. The results of this study imply that the agricultural sector is dominated by small farms in past, present and also in the future. The forecasting predicts that the numbers of marginal, medium and large farms are going to decrease in future. Moreover, it indicates that the average farm size of small landholders will slightly increase as the numbers of marginal and large landowners reduces. The analyses of the transition probabilities of labor occupational change show that rural households are gradually shifting to non-farm activities and mostly part-time farming from other income generating activities over time. In general, the forecast also suggests narrowing of agricultural activities and expansion of part-time farming and non-farm activities in future.