Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe
AbstractThis study examines the widely held view that rural off-farm income, in particular that earned from rural wage employment, may assist households in overcoming credit constraints when making farm investments. The analytical results of the study show that rural wage employment income can only assist in raising farm investment if it can be saved at positive rates and households face high-unemployment, i.e., they have idle labour. When there is no unemployment in the household or when unemployment is very low, increased availability of rural wage employment will in fact lead to "de-agrarianisation". Although the study finds evidence for high-unemployment from a 3-year panel data set of 359 households in 3 Resettlement Schemes in Zimbabwe, it finds no evidence that existing rural wage opportunities contribute towards raising households' farm investment. This is attributed to the fact that the savings rate for rural wage income is not significantly different from zero.
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Bibliographic InfoPaper provided by Centre for Economic Reform and Transformation, Heriot Watt University in its series CERT Discussion Papers with number 0403.
Date of creation: 2004
Date of revision:
off-farm income; rural wage employment; farm capital; agricultural development;
Find related papers by JEL classification:
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
- R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-18 (All new papers)
- NEP-DEV-2004-10-18 (Development)
- NEP-GEO-2004-10-18 (Economic Geography)
- NEP-MFD-2004-10-18 (Microfinance)
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