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Activity Portfolios In Rural Ethiopia: Choices And Constraints

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  • Maertens, Miet

Abstract

Peasant households, especially African rural households, can hold very diversified portfolios of economic activities. Portfolio diversification is often seen as a risk-reducing mechanism and linked with lowering risk at the cost of a lower income. A simple theoretical model of activity choice reveals that factors other than risk might influence the desire to diversity. In addition, binding entry-constraints might exist for certain off-farm activities. An empirical analysis of Ethiopian rural households suggests that entry-constraints are important in explaining portfolio and that diversification can actually result in increasing income.

Suggested Citation

  • Maertens, Miet, 2000. "Activity Portfolios In Rural Ethiopia: Choices And Constraints," 2000 Annual meeting, July 30-August 2, Tampa, FL 21839, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea00:21839
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    File URL: http://ageconsearch.umn.edu/record/21839/files/sp00ma04.pdf
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    References listed on IDEAS

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    1. Alderman, H. & Paxson, C.H., 1992. "Do the Poor Insure? A Synthesis of the Literature on Risk and Consumption in Developing Countries," Papers 164, Princeton, Woodrow Wilson School - Development Studies.
    2. Haggblade, Steven & Hazell, Peter & Brown, James, 1989. "Farm-nonfarm linkages in rural sub-Saharan Africa," World Development, Elsevier, vol. 17(8), pages 1173-1201, August.
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    Keywords

    Consumer/Household Economics;

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