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Off-Farm Labor Supply and Correlated Shocks: New Theoretical Insights and Evidence from Malawi

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  • Ralitza Dimova
  • Shubhashis Gangopadhyay
  • Katharina Michaelowa
  • Anke Weber

Abstract

We offer new conceptual insights into the understanding of occupational choice in uncertain rural environments, with a focus on its ex ante (before a shock) and ex post (after a shock) consequences for farmers belonging to different portions of the asset distribution. We model theoretically the choice between relatively safe subsistence farming, higher return but higher risk cash crop activities, and off-farm labor--conditional on preexisting asset allocation--and look at the general equilibrium labor market implications of correlated shocks. Our results, backed by evidence from Malawi, challenge some stylized perceptions in the literature on consumption smoothing via off-farm labor supply.

Suggested Citation

  • Ralitza Dimova & Shubhashis Gangopadhyay & Katharina Michaelowa & Anke Weber, 2015. "Off-Farm Labor Supply and Correlated Shocks: New Theoretical Insights and Evidence from Malawi," Economic Development and Cultural Change, University of Chicago Press, vol. 63(2), pages 361-391.
    • Handle: RePEc:ucp:ecdecc:doi:10.1086/679193
    DOI: 10.1086/679193
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    Cited by:

    1. Katharina Grabrucker & Michael Grimm, 2021. "Is There a Rainbow after the Rain? How Do Agricultural Shocks Affect Non‐Farm Enterprises? Evidence from Thailand," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1612-1636, October.
    2. Bhaumik, Sumon Kumar & Gang, Ira N. & Yun, Myeong-Su, 2017. "Poverty’s Deconstruction: Beyond the Visible," GLO Discussion Paper Series 147, Global Labor Organization (GLO).
    3. Sumon Kumar Bhaumik & Ralitza Dimova & Ira N. Gang, 2016. "Is Women’s Ownership of Land a Panacea in Developing Countries? Evidence from Land-Owning Farm Households in Malawi," Journal of Development Studies, Taylor & Francis Journals, vol. 52(2), pages 242-253, February.
    4. Martey, Edward & Etwire, Prince M. & Mockshell, Jonathan & Armah, Ralph & Akorsikumah, Eli, 2023. "Ecological shocks and children’s school attendance and farm work in Ghana," World Development Perspectives, Elsevier, vol. 31(C).
    5. Ralitza Dimova & Ira N. Gang, 2015. "Female Engagement in Commercial Agriculture, Interventions and Welfare in Malawi: What Works for the Poorest?," Departmental Working Papers 201522, Rutgers University, Department of Economics.
    6. Amadu, Festus O. & McNamara, Paul E. & Miller, Daniel C., 2020. "Understanding the adoption of climate-smart agriculture: A farm-level typology with empirical evidence from southern Malawi," World Development, Elsevier, vol. 126(C).
    7. Ralitza Dimova & Gil S. Epstein & Ira N. Gang, 2015. "Migration, Transfers and Child Labor," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 735-747, August.
    8. Amadu, Festus O. & McNamara, Paul E. & Miller, Daniel C., 2020. "Yield effects of climate-smart agriculture aid investment in southern Malawi," Food Policy, Elsevier, vol. 92(C).
    9. Mueller, Valerie & Sheriff, Glenn & Dou, Xiaoya & Gray, Clark, 2020. "Temporary migration and climate variation in eastern Africa," World Development, Elsevier, vol. 126(C).
    10. Dou, Xiaoya & Gray, Clark & Mueller, Valerie & Sheriff, Glenn, 2016. "Labor adaptation to climate variability in Eastern Africa," IFPRI discussion papers 1537, International Food Policy Research Institute (IFPRI).

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