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Is off-farm income reforming the farm? Evidence from Mexico

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  • Lisa Pfeiffer
  • Alejandro López-Feldman
  • J. Edward Taylor

Abstract

Does access to off-farm income complement or compete with agricultural production? This article explores the effect of off-farm income on agricultural production activities, using data from the 2003 Mexico National Rural Household Survey. We first discuss the theoretical conditions under which access to off-farm income may influence production in an agricultural household model. Instrumental-variable (IV) estimation methods are then used to test whether agricultural production activities, technologies, and input use differ between households with and without access to off-farm income. We find that off-farm income has a negative effect on agricultural output and the use of family labor on the farm, but a positive impact on the demand for purchased inputs. There is also a slight efficiency gain in households with access to off-farm income. Findings offer insights into how household production evolves as rural households increasingly engage in off-farm income activities. Copyright (c) 2009 International Association of Agricultural Economists.

Suggested Citation

  • Lisa Pfeiffer & Alejandro López-Feldman & J. Edward Taylor, 2009. "Is off-farm income reforming the farm? Evidence from Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 125-138, March.
  • Handle: RePEc:bla:agecon:v:40:y:2009:i:2:p:125-138
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    Cited by:

    1. Benjamin Tetteh Anang, 2017. "Effect of non-farm work on agricultural productivity: Empirical evidence from northern Ghana," WIDER Working Paper Series 038, World Institute for Development Economic Research (UNU-WIDER).
    2. Asfaw, Solomon & McCarthy, Nancy & Paolantonio, Adriana & Cavatassi, Romina & Amare, Mulubrhan & Lipper, Leslie, 2015. "Diversification, Climate Risk and Vulnerability to Poverty: Evidence from Rural Malawi," 2015 Conference, August 9-14, 2015, Milan, Italy 230216, International Association of Agricultural Economists.
    3. repec:eee:wdevel:v:99:y:2017:i:c:p:1-14 is not listed on IDEAS
    4. Kousar, Rakhshanda & Abdulai, Awudu, 2014. "Impact of non-farm work and land tenancy contracts on soil conservation measures," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170522, Agricultural Economics Society.
    5. Kusunose, Yoko & Rignall, Karen, 2015. "Labor migration, poverty and the long-term development impact of international migration," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205558, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    6. Babatunde, Raphael O. & Qaim, Matin, 2010. "Impact of off-farm income on food security and nutrition in Nigeria," Food Policy, Elsevier, vol. 35(4), pages 303-311, August.
    7. Bojnec, Stefan & Ferto, Imre, 2011. "Impact of Off-farm Income on Farm Efficiency in Slovenia," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108945, Agricultural Economics Society.
    8. Asfaw, Solomon & Savastano, Sara, 2015. "Topic: Building Resilience to Climate Change Through Social Protection and Climate-Smart Agriculture: Synergies and Trade-offs," 2015 Conference, August 9-14, 2015, Milan, Italy 210963, International Association of Agricultural Economists.
    9. Hernandez, Ricardo & Reardon, Thomas & Guan, Zhengfei, 2012. "Rural Nonfarm Employment and Farm Technology in Guatemala," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126849, International Association of Agricultural Economists.
    10. Babatunde, Raphael O., 2013. "On-Farm and Off-farm Works: Complement or Substitute? Evidence from Rural Nigeria," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 160437, African Association of Agricultural Economists (AAAE).
    11. Jin-Tao Zhan & Yan-Rui Wu & Xiao-Hui Zhang & Zhang-Yue Zhou, 2012. "Why do farmers quit from grain production in China? Causes and implications," China Agricultural Economic Review, Emerald Group Publishing, vol. 4(3), pages 342-362, August.
    12. Severini, Simone & Tantari, Antonella, 2014. "The contribution of different off-farm income sources and government payments to regional income inequality among farm households in Italy," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), issue 2, August.
    13. Tanui, Joseph & Groeneveld, Rolf & Klomp, Jeroen & Mowo, Jeremiahs & Ierland, Ekko C. van, 2013. "Explaining investments in sustainable land management: The role of various income sources in the smallholder farming systems of western Kenya," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161275, African Association of Agricultural Economists (AAAE).
    14. Alderman, Harold & Yemtsov, Ruslan, 2012. "Productive role of safety nets : background paper for the World Bank 2012-2022 social protection and labor strategy," Social Protection and Labor Policy and Technical Notes 67609, The World Bank.
    15. Babatunde, Raphael O. & Qaim, Matin, 2010. "Impact of Off-farm Income on Food Security and Nutrition in Nigeria," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 97332, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    16. Su, Weiliang & Eriksson, Tor & Zhang, Linxiu & Bai, Yunli, 2016. "Off-farm employment and time allocation in on-farm work in rural China from gender perspective," China Economic Review, Elsevier, vol. 41(C), pages 34-45.
    17. Rammohan, Anu & Pritchard, Bill, 2014. "The Role of Landholding as a Determinant of Food and Nutrition Insecurity in Rural Myanmar," World Development, Elsevier, vol. 64(C), pages 597-608.
    18. Seidu, Ayuba & Onel, Gulcan & Moss, Charles B. & Seale, James L., 2016. "Do Off-farm Work and Remittances affect Food Consumption Patterns? Evidence from Albania," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235851, Agricultural and Applied Economics Association.
    19. Chamberlin, Jordan & Jayne, T.S., 2013. "Unpacking the Meaning of ‘Market Access’: Evidence from Rural Kenya," World Development, Elsevier, vol. 41(C), pages 245-264.
    20. Augustyńska-Grzymek, Irena & Skarzyska, Aldona & Abramczuk, Šukasz, 2013. "The pluriactive development of agricultural holdings in Poland with regard to the living standards of their users," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 115(1), February.
    21. Adebayo Shittu, 2014. "Off-farm labour supply and production efficiency of farm household in rural Southwest Nigeria," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 2(1), pages 1-21, December.

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