Commodity Prices and Intra-Household Labor Allocation

Volatility in commodity markets poses a distinct risk to farmers in developing countries who rely on cash crop agriculture. We combine a time series of international coffee prices with a long-running panel on coffee-growing households in Vietnam to investigate coping mechanisms employed by farmers in a transitioning economy. We find that households cope with lower coffee prices by increasing wage labor of adults, with children and adolescents substituting for adults on the farm. Heterogeneity analysis indicates a stronger substitution pattern among women, ethnic minorities, and households with fewer assets. A variety of robustness checks corroborate these findings. Account of this finding should be taken in formulating and implementing social protection and inclusive growth policies.