Agricultural Productivity and Rural Household Incomes: Micro-Level Evidence From Zambia

It is widely accepted that agricultural productivity growth generates important multiplier effects on the rest of the economy through indirect linkages. However, most of this evidence comes from Asia and Latin America. Micro-level evidence in support of this hypothesis in Sub-Saharan Africa is actually quite thin. This study estimates a reduced-form relationship between multi-year lagged district-level summaries of crop productivity and total, own-farm, and off-farm income in Zambia. We use nationally representative household survey data to analyze this relationship; the nature of these data is unique to Zambia. Findings show a strong link between district-level productivity and household own-farm income. A doubling of multi-year lagged median district crop productivity per hectare translates into a 25-33% increase in own-farm income after controlling for household and community factors. There is some evidence of a positive link between district-level productivity and total household income, but the relationship between district crop productivity and off-farm income is sensitive to the model specification and imprecisely measured, suggesting that some of the critiques of the multiplier hypothesis for contemporary Africa may be valid. However, when the lagged crop productivity measures are confined to small farms cultivating less than 2 hectares, we find some evidence of a positive contribution of increases in lagged district-level productivity to off farm income – a doubling of productivity leading to a 34% increase in off-farm income.