An efficient nonmarket institution under imperfect markets: Labor sharing for tropical forest clearing

This article examines the substitutability, efficiency, and evolution of an important nonmarket institution in agrarian societies ? labor sharing. From analyses of field-level data on forest clearing through time among shifting cultivators in the Peruvian Amazon, we find: (1) no productivity difference and unitary elasticities of substitution among family, hired, and cooperative labor, i.e., perfect substitutes; (2) the combination of labor market and sharing makes total labor use unconstrained by household and network endowments, i.e., efficient labor allocation; and (3) as labor composition is constrained by network endowments and liquidity, credit policies alter not only labor composition, but also network formation.