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Agricultural factor markets in Sub-Saharan Africa: An updated view with formal tests for market failure

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  • Dillon, Brian
  • Barrett, Christopher B.

Abstract

This paper uses the recently collected Living Standard Measurement Study–Integrated Surveys on Agriculture Initiative data sets from five countries in Sub-Saharan Africa to provide a comprehensive overview of factor market participation by agrarian households and to formally test for failures in rural markets. Under complete and competitive markets, households can solve their consumption and production problems separately, so that household factor endowments do not predict input demand. This paper implements a simple, theoretically grounded test of this separation hypothesis, which can be interpreted as a reduced form test of market failure. In all five study countries, the analysis finds strong evidence of factor market failure. Moreover, those failures appear general and structural, not specific to subpopulations defined by gender, geography, human capital, or land quality. However, we show that rural markets are not generally missing in an absolute sense, suggesting that market existence is less of a problem than market function.

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  • Dillon, Brian & Barrett, Christopher B., 2017. "Agricultural factor markets in Sub-Saharan Africa: An updated view with formal tests for market failure," Food Policy, Elsevier, vol. 67(C), pages 64-77.
  • Handle: RePEc:eee:jfpoli:v:67:y:2017:i:c:p:64-77
    DOI: 10.1016/j.foodpol.2016.09.015
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    Cited by:

    1. Palacios-Lopez, Amparo & Christiaensen, Luc & Kilic, Talip, 2017. "How much of the labor in African agriculture is provided by women?," Food Policy, Elsevier, vol. 67(C), pages 52-63.
    2. McCullough, Ellen B., 2017. "Labor productivity and employment gaps in Sub-Saharan Africa," Food Policy, Elsevier, vol. 67(C), pages 133-152.
    3. Sheahan, Megan & Barrett, Christopher B., 2017. "Ten striking facts about agricultural input use in Sub-Saharan Africa," Food Policy, Elsevier, vol. 67(C), pages 12-25.
    4. Kosec, Katrina & Ghebru, Hosaena & Holtemeyer, Brian & Mueller, Valerie & Schmidt, Emily, 2016. "The effect of land inheritance on youth employment and migration decisions: Evidence from rural Ethiopia," IFPRI discussion papers 1594, International Food Policy Research Institute (IFPRI).
    5. Megan Sheahan & Joshua Ariga & T. S. Jayne, 2016. "Modeling the Effects of Input Market Reforms on Fertiliser Demand and Maize Production: A Case Study from Kenya," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 420-447, June.
    6. Deininger, Klaus & Savastano, Sara & Xia, Fang, 2017. "Smallholders’ land access in Sub-Saharan Africa: A new landscape?," Food Policy, Elsevier, vol. 67(C), pages 78-92.
    7. CAMARA, Alhassane, 2017. "Market participation of smallholders and the role of the upstream segment: evidence from Guinea," MPRA Paper 78903, University Library of Munich, Germany, revised May 2017.
    8. McCullough, Ellen B., 2016. "Occupational Choice and Agricultural Labor Exits in Sub-Saharan Africa," 2016 AAAE Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 249275, African Association of Agricultural Economists (AAAE).
    9. repec:eee:agisys:v:154:y:2017:i:c:p:90-99 is not listed on IDEAS
    10. McCullough, Ellen B., 2015. "Understanding Agricultural Labor Exits in Tanzania," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206080, Agricultural and Applied Economics Association;Western Agricultural Economics Association.

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