In-Kind Transfers, Marketization Costs and Household Specialization: Evidence from Indian Farmers

I examine the effect of in-kind staple transfers on agricultural production in a setting where transactions with markets are costly for households and result interlinked consumption decisions. leverage expansion India’s Public Distribution system between 1993-2009 as natural experiment generating variation quantity value grains transferred to districts. find that larger PDS quantities associated modest decreases farming increases market/ comparative advantage oriented specialization. The effects districts higher market transaction costs or less market-oriented agriculture.