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Social Networks and Factor Markets: Panel Data Evidence from Ethiopia

Author

Listed:
  • Kibrom A. Abay
  • Goytom A. Kahsay
  • Guush Berhane

Abstract

We investigate the role of an indigenous social network in Ethiopia, the iddir, in facilitating factor market transactions among smallholder farmers. We use detailed longitudinal household survey data and employ fixed effects estimation approaches to identify the effect of iddir membership on factor market transactions among farmers. We find that joining an iddir network improves households’ access to land, labour and credit transactions. Our findings also hint that iddir networks may crowd-out borrowing from local moneylenders (locally referred as ‘Arata Abedari’), a relatively expensive credit source. These results suggest that non-market institutions can play crucial roles in facilitating market transactions.

Suggested Citation

  • Kibrom A. Abay & Goytom A. Kahsay & Guush Berhane, 2018. "Social Networks and Factor Markets: Panel Data Evidence from Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 54(1), pages 174-190, January.
    • Handle: RePEc:taf:jdevst:v:54:y:2018:i:1:p:174-190
    DOI: 10.1080/00220388.2017.1288224
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    Citations

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    Cited by:

    1. Meike Will & Jürgen Groeneveld & Karin Frank & Birgit Müller, 2021. "Informal risk-sharing between smallholders may be threatened by formal insurance: Lessons from a stylized agent-based model," PLOS ONE, Public Library of Science, vol. 16(3), pages 1-18, March.
    2. Hang Su & Lingjing Duan, 2025. "The role of community mutual aid networks and social relationship capital in household financial vulnerability in China: heterogeneous influence of region," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-11, December.
    3. Ranucci, Immacolata & Abay, Kibrom A. & Tiberti, Luca, 2025. "Perceived need and measured well-being: How well do subjective rankings capture relative poverty?," GSSP working papers 2386, International Food Policy Research Institute (IFPRI).
    4. Abay, Kibrom A. & Chamberlin, Jordan & Berhane, Guush, 2021. "Are land rental markets responding to rising population pressures and land scarcity in sub-Saharan Africa?," Land Use Policy, Elsevier, vol. 101(C).
    5. Seck, Abdoulaye, "undated". "Heterogeneous Credit Constraints and Smallholder Farming in Senegal," 92nd Annual Conference, April 16-18, 2018, Warwick University, Coventry, UK 273491, Agricultural Economics Society.
    6. Gelo, Dambala & Muchapondwa, Edwin & Koch, Steven F., 2016. "Decentralization, market integration and efficiency-equity trade-offs: Evidence from Joint Forest Management in Ethiopian villages," Journal of Forest Economics, Elsevier, vol. 22(C), pages 1-23.
    7. Will, Meike & Groeneveld, Jürgen & Lenel, Friederike & Frank, Karin & Müller, Birgit, 2023. "Determinants of Household Vulnerability in Networks with Formal Insurance and Informal Risk-Sharing," Ecological Economics, Elsevier, vol. 212(C).
    8. Kahsay, Goytom Abraha & Bulte, Erwin, 2019. "Trust, regulation and participatory forest management: Micro-level evidence on forest governance from Ethiopia," World Development, Elsevier, vol. 120(C), pages 118-132.
    9. Sharmistha Self & Richard Grabowski, 2018. "Factors influencing knowledge of HIV/AIDS in Nepal: role of socioeconomic interactions," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 20(1), pages 174-191, April.
    10. Marcelo Arbex & Jéssica Faciroli & Ricardo Silva Freguglia & Marcel de Toledo Vieira, 2023. "Brazil’s Bolsa Família: Neighborhood and Racial Group Networks," Journal of Development Studies, Taylor & Francis Journals, vol. 59(4), pages 593-610, April.

    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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