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Does Non-farm Sector Employment reduce Rural Poverty and Vulnerability? Evidence from Vietnam and India

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Author Info

  • Katsushi S. Imai

    (Economics, School of Social Sciences, University of Manchester (UK) and RIEB, Kobe University (Japan))

  • Raghav Gaiha

    (Faculty of Management Studies, University of Delhi, India)

  • Ganesh Thapa

    (International Fund for Agricultural Development, Italy)

Abstract

The present study examines whether employment in the rural non-farm sector (RNFE) has any poverty-reducing and/or vulnerability-reducing effect in Vietnam and India. To take account of sample selection bias associated with RNFE, we have applied treatment-effects model, a variant of Heckman sample selection model. It is found that log per capita consumption or log mean per capita expenditure (MPCE) significantly increased as a result of access to RNFE in Vietnam and India - which is consistent with poverty reducing role of accessing RNFE - with the aggregate effect larger in Vietnam than in India. Access to RNFE significantly reduces vulnerability too in both countries, implying that diversification of household activities into non-farm sector would reduce such risks. When we disaggregate non-farm sector employment by its type, we find that poverty and vulnerability reducing effects are much larger for sales, professionals, and clerks than for unskilled or manual employment in the non-farm sector in both countries. However, as even unskilled or manual non-farm employment significantly reduces poverty and vulnerability in India, this has considerable policy significance as the rural poor do not have easy access to skilled non-farm employment.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2012-25.pdf
File Function: Revised version, 2012
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Bibliographic Info

Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2012-25.

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Length: 35 pages
Date of creation: Oct 2012
Date of revision: Nov 2012
Handle: RePEc:kob:dpaper:dp2012-25

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Keywords: Poverty; Vulnerability; Non-farm sector; Treatment Effects Model; Vietnam; India;

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References

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  1. Md. Shafiul Azam & Katsushi S. Imai, 2010. "Vulnerability and poverty in Bangladesh," Working Papers id:2675, eSocialSciences.
  2. Katsushi S. Imai, 2011. "Poverty, undernutrition and vulnerability in rural India: role of rural public works and food for work programmes," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(6), pages 669-691, November.
  3. Raghav Gaiha & Nidhi Kaicker & Katsushi S. Imai & Ganesh Thapa, 2012. "Demand for Nutrients in India: An Analysis Based on the 50th, 61st and 66th Rounds of the NSS," Discussion Paper Series DP2012-14, Research Institute for Economics & Business Administration, Kobe University.
  4. Jha, Raghbendra & Gaiha, Raghav & Sharma, Anurag, 2009. "Calorie and Micronutrient Deprivation and Poverty Nutrition Traps in Rural India," World Development, Elsevier, vol. 37(5), pages 982-991, May.
  5. Katsushi Imai & Samuel Kobina Annim & Veena S. Kulkarni & Raghav Gaiha, 2013. "Does Women's Empowerment Reduce Prevalence of Stunted and Underweight Children in Rural India?," Discussion Paper Series DP2013-33, Research Institute for Economics & Business Administration, Kobe University.
  6. Owusu, Victor & Abdulai, Awudu & Abdul-Rahman, Seini, 2011. "Non-farm work and food security among farm households in Northern Ghana," Food Policy, Elsevier, vol. 36(2), pages 108-118, April.
  7. Thomas Reardon & J. Edward Taylor & Kostas Stamoulis & Peter Lanjouw & Arsenio Balisacan, 2000. "Effects of Non-Farm Employment on Rural Income Inequality in Developing Countries: An Investment Perspective," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 266-288.
  8. Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics, Blackwell, vol. 26(1), pages 1-23, October.
  9. Pasquale Scandizzo & Raghav Gaiha & Katsushi Imai, 2009. "Option Values, Switches, and Wages: An Analysis of the Employment Guarantee Scheme in India," Review of Development Economics, Wiley Blackwell, vol. 13(2), pages 248-263, 05.
  10. Dasgupta, Partha, 1997. "Nutritional status, the capacity for work, and poverty traps," Journal of Econometrics, Elsevier, vol. 77(1), pages 5-37, March.
  11. Bliss, Christopher & Stern, Nicholas, 1978. "Productivity, wages and nutrition : Part I: the theory," Journal of Development Economics, Elsevier, vol. 5(4), pages 331-362, December.
  12. Katsushi S. Imai & Samuel Kobina Annim & Raghav Gaiha & Veena S. Kulkarni, 2012. "Nutrition, Activity Intensity and Wage Linkages: Evidence from India," Discussion Paper Series DP2012-10, Research Institute for Economics & Business Administration, Kobe University, revised Dec 2012.
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