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How costly is it for poor farmers to lift themselves out of poverty?

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Author Info
Cadot, Olivier
Dutoit, Laure
Olarreaga, Marcelo

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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 generate large gains, if moved out of subsistence, yielding useful information for the targeting of trade-adjustment assistance programs.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3881.

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Date of creation: 01 Apr 2006
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Handle: RePEc:wbk:wbrwps:3881

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Related research
Keywords: Markets and Market Access; Rural Poverty Reduction; Economic Theory&Research; Agribusiness; Access to Markets;

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  6. Hotchkiss, Julie L, 1991. "The Definition of Part-Time Employment: A Switching Regression Model with Unknown Sample Selection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(4), pages 899-917, November. [Downloadable!] (restricted)
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  11. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September. [Downloadable!] (restricted)
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  18. Lee, Lung-Fei, 1979. "Identification and Estimation in Binary Choice Models with Limited (Censored) Dependent Variables," Econometrica, Econometric Society, vol. 47(4), pages 977-96, July. [Downloadable!] (restricted)
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