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Market Imperfections And Class Structure: The Case Of South Africa

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  • Lovo, Stefania

Abstract

Land and market imperfections shape the organization of agricultural production and lead to different production regimes within rural farm households in South Africa. This paper presents a theoretical model to explain the presence of three main households groups (classes) determined on the basis of the labor regime adopted: small peasants (working both on and off farm), self cultivators (autarkic in labor) and hiring in households. Membership in the three categories is determined by the endogenous shadow wage and the effective market wages. A generalized ordered logit model is used to test the main predictions of the model. Market imperfections, which prevent household from accessing markets, are expected to have different impacts on heterogenous households; in this study, a Brant test on coefficient constancy helps to identify the household specific factors affecting market participation.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 107th Seminar, January 30-February 1, 2008, Sevilla, Spain with number 6675.

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Date of creation: 2008
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Handle: RePEc:ags:eaa107:6675

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Keywords: farm households; market imperfections; liquidity constraint; Farm Management; Industrial Organization; International Development;

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  1. Case, Anne & Deaton, Angus, 1998. "Large Cash Transfers to the Elderly in South Africa," Economic Journal, Royal Economic Society, vol. 108(450), pages 1330-61, September.
  2. Stephen Pudney & Michael Shields, 2000. "Gender, race, pay and promotion in the British nursing profession: estimation of a generalized ordered probit model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(4), pages 367-399.
  3. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
  4. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-417, November.
  5. Robert Eastwood & Johann Kirsten & Michael Lipton, 2006. "Premature deagriculturalisation? Land inequality and rural dependency in Limpopo province, South Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 42(8), pages 1325-1349.
  6. A. Bedi & I. Tunali, 1996. "Testing for Market Imperfections: Participation in Land & Labor Contracts in Turkish Agriculture," Working Papers 9626, Economic Research Forum, revised Sep 1996.
  7. Louise Fenwick & Mike Lyne, 1999. "The relative importance of liquidity and other constraints inhibiting the growth of small-scale farming in KwaZulu-Natal," Development Southern Africa, Taylor & Francis Journals, vol. 16(1), pages 141-155.
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