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How Costly is it for Poor Farmers to Lift Themselves out of Subsistence?

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  • Olivier Cadot
  • Laure Dutoit
  • Marcelo Olarreaga

Abstract

The main objective of this paper is to provide estimates of the cost of moving out of subsistence for Madagascar's farmers. The analysis is based on a simple asset-return model of occupational choice. Estimates suggest that the entry (sunk) cost associated with moving out of subsistence can be quite large |somewhere between 124 and 153 percent of a subsistence farmer's annual production. Our results make it possible to identify farm characteristics likely to generatee large gains if moved out of subsistence, yielding useful information for the targeting of trade-adjustment assistance programs.

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Bibliographic Info

Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 05.09.

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Length: 44 pages
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:lau:crdeep:05.09

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Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
Fax: ++41 21 692.33.05
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Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
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Keywords: threshold regression; switching regression; unknown sample separation; Madagascar; subsistence; entry costs;

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Cited by:
  1. Narayanan, Sudha, 2014. "Profits from participation in high value agriculture: Evidence of heterogeneous benefits in contract farming schemes in Southern India," Food Policy, Elsevier, vol. 44(C), pages 142-157.

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