Bezu, Sosina and Barrett, Christopher B. and Holden, Stein T. (2010): Does the nonfarm economy offer pathways for upward mobility? Evidence from a panel data study in Ethiopia.
Download (287Kb) | Preview
Empirical studies across many developing countries routinely document a positive correlation between participation in rural nonfarm employment and households’ wealth or income. This paper explores whether nonfarm employment leads to higher consumption expenditure growth in Ethiopia. We find that: 1) households’ consumption expenditure growth is positively correlated with the initial share of nonfarm income; 2) the growth elasticity of nonfarm income share is higher for wealthier households; and 3) the main source of growth for nonfarm participants comes from the higher rates of return participants enjoy on their human and physical capital.
|Item Type:||MPRA Paper|
|Original Title:||Does the nonfarm economy offer pathways for upward mobility? Evidence from a panel data study in Ethiopia|
|Keywords:||rural nonfarm; income dynamics; income diversification; Africa; Ethiopia; impact|
|Subjects:||D - Microeconomics > D1 - Household Behavior and Family Economics > D13 - Household Production and Intrahousehold Allocation|
|Depositing User:||Sosina Bezu|
|Date Deposited:||05. Jan 2012 20:11|
|Last Modified:||14. Feb 2013 07:58|
ADB (2000). Ethiopia Structural Adjustment Programme: Project Performance Evaluation Report (Report): African Development Bank Group.
Baltagi, B. H., Bresson, G., & Pirotte, A. (2003). Fixed effects, random effects or Hausman-Taylor?: A pretest estimator. Economics Letters, 79(3), 361-369.
Barrett, C. B. (2005). Rural poverty dynamics: development policy implications. Agricultural Economics, 32(Supplement 1), 45-60.
Barrett, C. B., Bezuneh, M., & Aboud, A. (2001). Income diversification, poverty traps and policy shocks in Cote d'Ivoire and Kenya. Food Policy, 26(4), 367-384.
Barrett, C. B., Reardon, T., & Webb, P. (2001). Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications. Food Policy, 26(4), 315-331.
Barrett, C. B., Sherlund, S. M., & Adesina, A. A. (2008). Shadow wages, allocative inefficiency, and labor supply in smallholder agriculture. Agricultural Economics, 38(1), 21-34.
Bevan, P., & Pankhurst, A. (1996). A Social Analysis of Fifteen Rural Economies in Ethiopia: Overseas Development Administration, UK.
Bezu, S., & Holden, S. (2008). Can food-for-work encourage agricultural production? Food Policy, 33(6), 541-549.
Blinder, A. S. (1973). Wage Discrimination: Reduced Form and Structural Estimates. The Journal of Human Resources, 8(4), 436-455.
Canagarajah, S., Newman, C., & Bhattamishra, R. (2001). Non-farm income, gender, and inequality: evidence from rural Ghana and Uganda. Food Policy, 26(4), 405-420.
Collier, P., & Lal, D. (1984). Why poor people get rich: Kenya 1960-1979. World Development, 12(10), 1007-1018. Corral, L., & Reardon, T. (2001). Rural Nonfarm Incomes in Nicaragua. World Development, 29(3), 427-442.
CSA (2001). Report on the 1999/2000 household income, consumption and expenditure survey: Centeral Statistical Agency of Ethiopia.
de Janvry, A., & Sadoulet, E. (2001). Income Strategies Among Rural Households in Mexico: The Role of Off-farm Activities. World Development, 29(3), 467-480.
Dercon, S. (2004). Growth and shocks: evidence from rural Ethiopia. Journal of Development Economics, 74(2), 309-329.
Dercon, S. (2006). Economic reform, growth and the poor: Evidence from rural Ethiopia. Journal of Development Economics, 81(1), 1-24.
Dercon, S., & Krishnan, P. (1996). Income Portfolios in Rural Ethiopia and Tanzania: Choices and Constraints Journal of Development Studies, 32(6), 850-875.
Ellis, F. (1998). Household strategies and rural livelihood diversification. Journal of Development Studies, 35(1), 1-38.
Ellis, F. (2000). The determinants of rural livelihood diversification in developing countries. Journal of Agricultural Economics, 51(2), 289-302.
Ellis, F., & Freeman, H. A. (2004). Rural Livelihoods and Poverty Reduction Strategies in Four African Countries. Journal of Development Studies, 40(4), 1-30.
Evans, H. E., & Ngau, P. (1991). Rural-Urban Relations, Household Income Diversification and Agricultural Productivity. Development and Change, 22(3), 519-545.
Haggblade, S. (2007). Alternative perceptions of the rural nonfarm economy. In T. Reardon, S. Haggblade & P. Hazell (Eds.), Transforming the rural nonfarm economy: opportunities and threats in the developing world. Baltimore: Johns Hopkins University Press.Hausman, J. A., &
Taylor, W. E. (1981). Panel Data and Unobservable Individual Effects. Econometrica, 49(6), 1377-1398.
Holden, S., Shiferaw, B., & Pender, J. (2004). Non-farm income, household welfare, and sustainable land management in a less-favoured area in the Ethiopian highlands. Less Favoured Areas, 29(4), 369-392.
Kijima, Y., & Lanjouw, P. (2005). Economic Diversification and Poverty Decline in Rural India. Indian Journal of Labor Economics, 48(2).
Kijima, Y., Matsumoto, T., & Yamano, T. (2006). Nonfarm employment, agricultural shocks, and poverty dynamics: evidence from rural Uganda. Agricultural Economics, 35(Supplement 3), 459-467.
Kochar, A. (1995). Explaining Household Vulnerability to Idiosyncratic Income Shocks. The American Economic Review, 85(2), 159-164.
Kung, J. K. S., & Lee, Y. F. (2001). So what if there is income inequality? The distributive consequence of nonfarm employment in rural China. Economic Development and Cultural Change, 50(1), 19-46.
Lanjouw, J. O., & Lanjouw, P. (2001). The rural non-farm sector: issues and evidence from developing countries. Agricultural Economics, 26(1), 1-23.
Lanjouw, P., & Shariff, A. (2002). Rural Non-Farm Employment in India: Access, Income and Poverty Impact. [working paper]. Working Paper Series No.81(81).
Nargis, N., & Hossain, M. (2006). Income dynamics and pathways out of rural poverty in Bangladesh, 1988-2004. Agricultural Economics, 35(Supplement 3), 425-435.
Oaxaca, R. (1973). Male-Female Wage Differentials in Urban Labor Markets. International Economic Review, 14(3), 693-709.
Reardon, T. (1997). Using evidence of household income diversification to inform study of the rural nonfarm labor market in Africa. World Development, 25(5), 735-747.
Reardon, T., Berdegue, J., Barrett, C. B., & Stamoulis, K. (2007). Household income diversification into rural nonfarm activities. In T. Reardon, S. Haggblade & P. Hazell (Eds.), Transforming the rural nonfarm economy: opportunities and threats in the developing world. Baltimore: Johns Hopkins University Press.
Reardon, T., Berdegue, J., & Escobar, G. (2001). Rural nonfarm employment and incomes in Latin America: Overview and policy implications. World Development, 29(3), 395-409.
Reardon, T., Taylor, J. E., Stamoulis, K., Lanjouw, P., & Balisacan, A. (2000). Effects of non-farm employment on rural income inequality in developing countries: An investment perspective. Journal of Agricultural Economics, 51(2), 266-288.
Ruben, R., & Van den Berg, M. (2001). Nonfarm Employment and Poverty Alleviation of Rural Farm Households in Honduras. World Development, 29(3), 549-560.
Woldenhanna, T., & Oskam, A. (2001). Income diversification and entry barriers: evidence from the Tigray region of northern Ethiopia. Food Policy, 26(4), 351-365.