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Participation in Off-Farm Employment, Risk Preferences, and Weather Variability: The Case of Ethiopia

  • Bezabih, Mintewab
  • Gebreegziabher, Zenebe
  • GebreMedhin, Liyousew
  • Kohlin, Gunnar

This article assesses the relative importance of risk preferences and rainfall availability on households’ decision to engage in off-farm employment. Devoting time for off-farm activities, while it helps households earn additional incomes, involves a number of uncertainties. Unique panel data from Ethiopia which includes experimentally generated risk preference measures combined with longitudinal rainfall data is used in the analysis. An off farm participation decision and activity choice showed that both variability and reduced availability of rainfall as well as neutral risk preferences increase the likelihood of off-farm participation. From policy perspective, the results imply that expanding off farm opportunities could act as safety nets in the face of weather uncertainty. In addition, policy initiatives geared towards encouraging income diversification through off farm employment need to address underlying factor that condition risk bearing ability of households.

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Paper provided by African Association of Agricultural Economists (AAAE) & Agricultural Economics Association of South Africa (AEASA) in its series 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa with number 95784.

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Date of creation: 2010
Date of revision:
Handle: RePEc:ags:aaae10:95784
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