Does the Nonfarm Economy Offer Pathways for Upward Mobility? Evidence from a Panel Data Study in Ethiopia
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.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frank Ellis & H Ade Freeman, 2004. "Rural Livelihoods and Poverty Reduction Strategies in Four African Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 40(4), pages 1-30.
- Pramila Krishnan & Stefan Dercon, 1995. "Income portfolios in rural Ethiopia and Tanzania: choices and constraints," CSAE Working Paper Series 1995-12, Centre for the Study of African Economies, University of Oxford.
- Canagarajah, S. & Newman, C. & Bhattamishra, R., 2001. "Non-farm income, gender, and inequality: evidence from rural Ghana and Uganda," Food Policy, Elsevier, vol. 26(4), pages 405-420, August.
- Woldenhanna, T. & Oskam, A., 2001. "Income diversification and entry barriers: evidence from the Tigray region of northern Ethiopia," Food Policy, Elsevier, vol. 26(4), pages 351-365, August.
- Reardon, Thomas, 1997. "Using evidence of household income diversification to inform study of the rural nonfarm labor market in Africa," World Development, Elsevier, vol. 25(5), pages 735-747, May.
- Christopher B. Barrett & Shane M. Sherlund & Akinwumi A. Adesina, 2008. "Shadow wages, allocative inefficiency, and labor supply in smallholder agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 38(1), pages 21-34, 01.
- Hausman, Jerry A. & Taylor, William E., 1981.
"Panel data and unobservable individual effects,"
Journal of Econometrics,
Elsevier, vol. 16(1), pages 155-155, May.
- Stefan Dercon, 2004.
"Growth and Shocks: evidence from rural Ethiopia,"
Development and Comp Systems
- Frank Ellis, 2000. "The Determinants of Rural Livelihood Diversification in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 289-302.
- Janvry, Alain de & Sadoulet, Elisabeth, 2001. "Income Strategies Among Rural Households in Mexico: The Role of Off-farm Activities," World Development, Elsevier, vol. 29(3), pages 467-480, March.
- Lanjouw, Jean O. & Lanjouw, Peter, 2001.
"The rural non-farm sector: issues and evidence from developing countries,"
Agricultural Economics of Agricultural Economists,
International Association of Agricultural Economists, vol. 26(1), October.
- Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics, Blackwell, vol. 26(1), pages 1-23, October.
- Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
- Haggblade, Steven & Hazell, Peter B. R. & Reardon, Thomas, 2009. "Transforming the rural nonfarm economy: Opportunities and threats in the developing world," Issue briefs 58, International Food Policy Research Institute (IFPRI).
- Frank Ellis, 1998. "Household strategies and rural livelihood diversification," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-38.
- Stefan Dercon, 2001.
"Economic reform, growth and the poor: evidence from rural Ethiopia,"
CSAE Working Paper Series
2001-08, Centre for the Study of African Economies, University of Oxford.
- Dercon, Stefan, 2006. "Economic reform, growth and the poor: Evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 81(1), pages 1-24, October.
- Nigar Nargis & Mahabub Hossain, 2006. "Income dynamics and pathways out of rural poverty in Bangladesh, 1988-2004," Agricultural Economics, International Association of Agricultural Economists, vol. 35(s3), pages 425-435, November.
- 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, vol. 26(4), pages 315-331, August.
- Baltagi, Badi H. & Bresson, Georges & Pirotte, Alain, 2003. "Fixed effects, random effects or Hausman-Taylor?: A pretest estimator," Economics Letters, Elsevier, vol. 79(3), pages 361-369, June.
- repec:uwp:jhriss:v:8:y:1973:i:4:p:436-455 is not listed on IDEAS
- Yoko Kijima & Tomoya Matsumoto & Takashi Yamano, 2006. "Nonfarm employment, agricultural shocks, and poverty dynamics: evidence from rural Uganda," Agricultural Economics, International Association of Agricultural Economists, vol. 35(s3), pages 459-467, November.
- Collier, Paul & Lal, Deepak, 1984. "Why poor people get rich: Kenya 1960-1979," World Development, Elsevier, vol. 12(10), pages 1007-1018, October.
- Ruben, Ruerd & Van den berg, Marrit, 2001. "Nonfarm Employment and Poverty Alleviation of Rural Farm Households in Honduras," World Development, Elsevier, vol. 29(3), pages 549-560, March.
- Barrett, Christopher B., 2003.
"Rural Poverty Dynamics: Development Policy Implications,"
2003 Annual Meeting, August 16-22, 2003, Durban, South Africa: Plenary Sessions
245921, International Association of Agricultural Economists.
- Christopher B. Barrett, 2005. "Rural poverty dynamics: development policy implications," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 45-60, 01.
- Barrett, Christopher B., 2003. "Rural Poverty Dynamics: Development Policy Implications," Working Papers 127243, Cornell University, Department of Applied Economics and Management.
- Barrett, Christopher B. & Bezuneh, Mesfin & Aboud, Abdillahi, 2001. "Income diversification, poverty traps and policy shocks in Cote d'Ivoire and Kenya," Food Policy, Elsevier, vol. 26(4), pages 367-384, August.
- Reardon, Thomas & Berdegue, Julio & Escobar, German, 2001. "Rural Nonfarm Employment and Incomes in Latin America: Overview and Policy Implications," World Development, Elsevier, vol. 29(3), pages 395-409, March.
- Kung, James K S & Lee, Yiu-fai, 2001. "So What If There Is Income Inequality? The Distributive Consequence of Nonfarm Employment in Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 50(1), pages 19-46, October.
- Block, S. & Webb, P., 2001. "The dynamics of livelihood diversification in post-famine Ethiopia," Food Policy, Elsevier, vol. 26(4), pages 333-350, August.
- Holden, Stein & Shiferaw, Bekele & Pender, John, 2004. "Non-farm income, household welfare, and sustainable land management in a less-favoured area in the Ethiopian highlands," Food Policy, Elsevier, vol. 29(4), pages 369-392, August.
- Thomas Reardon & J. Edward Taylor & Kostas Stamoulis & Peter Lanjouw & Arsenio Balisacan, 2000. "Effects of Non-Farm Employment on Rural Income Inequality in Developing Countries: An Investment Perspective," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 266-288.
- Kochar, Anjini, 1995. "Explaining Household Vulnerability to Idiosyncratic Income Shocks," American Economic Review, American Economic Association, vol. 85(2), pages 159-164, May.
- Corral, Leonardo & Reardon, Thomas, 2001. "Rural Nonfarm Incomes in Nicaragua," World Development, Elsevier, vol. 29(3), pages 427-442, March.
- Bezu, Sosina & Holden, Stein, 2008. "Can food-for-work encourage agricultural production?," Food Policy, Elsevier, vol. 33(6), pages 541-549, December.
When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:40:y:2012:i:8:p:1634-1646. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.