Households' income-generating activities and marginal returns to labor in rural Tanzania
AbstractThis study uses detailed household-level data to investigate income and activity diversification among households in rural Tanzania. Unlike previous research on diversification, I explicitly evalutate marginal returns within different activities, aiming to assess whether households are able to allocate labor so as to maximize their incomes, and what factors determine if they do. The findings indicate that specialization in agriculture is not correlated with household welfare, and that agricultural wage work is a last resort option, as agricultural wage laborers also allocate labor to their own farms to such an extent that marginal returns in own farming become lower than among others. Furthermore, wage rates are much higher than the agricultural shadow wages, implying that there are gains to be made from expanding the non-farm side of the rural economy. However, there is no evidence that households are stuck in agriculture due to being constrained from entering the existing labor market. While I do not find preferences for own crops being important for labor allocation to farming, work preferences seem to play a role. There is also some evidence that both credit and social networks are important determinants of a household's probability of being stuck in low-return agriculture.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 547.
Length: 32 pages
Date of creation: 23 Nov 2012
Date of revision:
Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
More information through EDIRC
Tanzania; income diversification; shadow wages;
Find related papers by JEL classification:
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Andersson).
If references are entirely missing, you can add them using this form.