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Does the nonfarm economy offer pathways for upward mobility? Evidence from a panel data study in Ethiopia

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  • Bezu, Sosina
  • Barrett, Christopher B.
  • Holden, Stein T.

Abstract

Empirical studies across many developing countries routinely document a positive correlation between participation in rural nonfarm employment and households’ wealth or income. This paper explores whether nonfarm employment leads to higher consumption expenditure growth in Ethiopia. We find that: 1) households’ consumption expenditure growth is positively correlated with the initial share of nonfarm income; 2) the growth elasticity of nonfarm income share is higher for wealthier households; and 3) the main source of growth for nonfarm participants comes from the higher rates of return participants enjoy on their human and physical capital.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35754.

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Date of creation: 2010
Date of revision: 2011
Handle: RePEc:pra:mprapa:35754

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Keywords: rural nonfarm; income dynamics; income diversification; Africa; Ethiopia; impact;

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Cited by:
  1. Morsello, Carla & Delgado, Juliana Aparecida da Silva & Fonseca-Morello, Thiago & Brites, Alice Dantas, 2014. "Does trading non-timber forest products drive specialisation in products gathered for consumption? Evidence from the Brazilian Amazon," Ecological Economics, Elsevier, vol. 100(C), pages 140-149.
  2. Mathenge, Mary K. & Smale, Melinda & Opiyo, Joseph, 2013. "Off-farm Work and Fertilizer Intensification among Smallholder Farmers in Kenya: A Cross-Crop Comparison," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150638, Agricultural and Applied Economics Association.

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