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The returns to participation in the non-farm sector in rural Rwanda

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  • Dabalen, Andrew
  • Paternostro, Stefano
  • Pierre, Gaelle

Abstract

In this paper, we investigate the differences in outcomes (earnings and consumption) between individuals (households) who participate in the non-farm sector and those who do not. We use propensity score matching methods, where we create appropriate comparison groups of individuals and households. First we find that non-farm self-employed individuals in rural Rwanda have significantly higher earnings than farm workers and non-farm formal employees. Second, we show that the benefits to non-farm self-employment are much higher among the non-poor than among the poor. Third, we show that diversified households, those with a farm and a non-farm enterprise, are less likely to be poor. Finally, farm households who do not participate in the market have significantly lower consumption levels than households that do. However, the benefits to market participation appear to matter less for the poor than for the non-poor. We find little difference in expenditures between market participants and non-market participants, for comparable households in the bottom 40% of the expenditure distribution.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3462.

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Date of creation: 01 Dec 2004
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Handle: RePEc:wbk:wbrwps:3462

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Keywords: Environmental Economics&Policies; Public Health Promotion; Health Monitoring&Evaluation; Decentralization; Housing&Human Habitats; Livestock&Animal Husbandry; Crops&Crop Management Systems; Health Monitoring&Evaluation; Environmental Economics&Policies; Housing&Human Habitats;

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  1. Rajeev H. Dehejia & Sadek Wahba, 1998. "Causal Effects in Non-Experimental Studies: Re-Evaluating the Evaluation of Training Programs," NBER Working Papers 6586, National Bureau of Economic Research, Inc.
  2. Dunn, Thomas & Holtz-Eakin, Douglas, 2000. "Financial Capital, Human Capital, and the Transition to Self-Employment: Evidence from Intergenerational Links," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 18(2), pages 282-305, April.
  3. Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 26(1), October.
  4. Vijverberg, P.M., 1992. "Measuring Income from Family Enterprises with Household Surveys," Papers, World Bank - Living Standards Measurement 84, World Bank - Living Standards Measurement.
  5. Ahituv, Avner & Kimhi, Ayal, 2002. "Off-farm work and capital accumulation decisions of farmers over the life-cycle: the role of heterogeneity and state dependence," Journal of Development Economics, Elsevier, Elsevier, vol. 68(2), pages 329-353, August.
  6. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, StataCorp LP, vol. 2(4), pages 358-377, November.
  7. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, Elsevier, vol. 26(4), pages 315-331, August.
  8. Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics, Blackwell, Blackwell, vol. 26(1), pages 1-23, October.
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Cited by:
  1. Olper, Alessandro & Falkowski, Jan & Swinnen, Johan F.M., 2009. "Democracy and Agricultural Protection: Parametric and Semi-parametric Matching Estimates," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin, Agricultural and Applied Economics Association 49313, Agricultural and Applied Economics Association.
  2. World Bank, 2008. "Improving the Management of Secondary and Tertiary Roads in the South East Europe Countries," World Bank Other Operational Studies 7786, The World Bank.
  3. Essama-Nssah, B., 2006. "Propensity score matching and policy impact analysis - a demonstration in EViews," Policy Research Working Paper Series, The World Bank 3877, The World Bank.
  4. Ciaian, Pavel & Falkowski, Jan & Kancs, d'Artis & Pokrivcak, Jan, 2011. "Productivity and Credit Constraints Firm-Level Evidence from Propensity Score Matching," Working Papers, Factor Markets, Centre for European Policy Studies 117484, Factor Markets, Centre for European Policy Studies.
  5. Pavel Ciaian & Jan Falkowski & d'Artis Kancs, 2012. "Access to credit, factor allocation and farm productivity: Evidence from the CEE transition economies," Agricultural Finance Review, Emerald Group Publishing, Emerald Group Publishing, vol. 72(1), pages 22-47, March.
  6. World Bank, 2007. "Rwanda : Toward Sustained Growth and Competitiveness, Volume 2. Main Report," World Bank Other Operational Studies 7702, The World Bank.
  7. Marijke Verpoorten, 2007. "Household coping in war- and peacetime: cattle sales in Rwanda, 1991-2001," Center for Economic Studies - Discussion papers, Katholieke Universiteit Leuven, Centrum voor Economische Studiën ces0727, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  8. Pavel Ciaian & Jan Fałkowski & D’Artis Kancs, 2012. "Productivity and credit constraints: A firm-level propensity score evidence for agricultural farms in central and east European countries," Acta Oeconomica, Akadémiai Kiadó, Hungary, Akadémiai Kiadó, Hungary, vol. 62(4), pages 459-487, December.
  9. Chandra, Vandana & Li, Ying & Osorio Rodarte, Israel, 2007. "Commodity Export Diversification in Rwanda - Many Export Discoveries with Little Scaling-Up," MPRA Paper 18556, University Library of Munich, Germany.
  10. Birthal, Pratap S. & Negi, Digvijay S. & Jha, Awadesh K. & Singh, Dhiraj, 2014. "Income Sources of Farm Households in India: Determinants, Distributional Consequences and Policy Implications," Agricultural Economics Research Review, Agricultural Economics Research Association (India), Agricultural Economics Research Association (India), vol. 27(1).
  11. Diop, Ndiame & Brenton, Paul & Asarkaya, Yakup, 2005. "Trade costs, export development, and poverty in Rwanda," Policy Research Working Paper Series, The World Bank 3784, The World Bank.
  12. World Bank, 2008. "Improving the Management of Secondary and Tertiary Roads in the South East Europe Countries," World Bank Other Operational Studies 6213, The World Bank.

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