IDEAS home Printed from https://ideas.repec.org/p/ags/aaea05/19207.html

Does Human Capital Raise Farm or Non-farm Earning More? New Insight from Rural Pakistan Panel Survey

Author

Listed:
  • Satriawan, Elan
  • Swinton, Scott M.

Abstract

This study explores how human capital affects farm household earnings using two tools to refine measurement of human capital effects. First, it employs a two-sector model to allow the allocation of family labor between farm and non-farm activities. Second, it accounts for village fixed effects to evaluate whether results from panel data differ meaningfully from a cross-sectional data analysis with local binary variables. The results show that education has a negligible effect on farm earnings; instead, experience appears to be the principal channel by which human capital affects agricultural performance in a traditional rural setting. Our results also suggest that prior models that fail to separate non-farm activities spuriously exaggerated the effect of education to the farm sector. In addition, typical cross-sectional analyses that ignore fixed effects may cause the effects of education on rural household earnings to be significantly overstated. The fact that panel data regressions accounting for village-level fixed effects found only one instance of education raising earnings the effect of literacy on non-farm income suggests that considerable heterogeneity may have been ignored in cross-sectional data analyses, especially ones that omitted village binary variables.

Suggested Citation

  • Satriawan, Elan & Swinton, Scott M., 2005. "Does Human Capital Raise Farm or Non-farm Earning More? New Insight from Rural Pakistan Panel Survey," 2005 Annual meeting, July 24-27, Providence, RI 19207, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19207
    DOI: 10.22004/ag.econ.19207
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/19207/files/sp05sa01.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.19207?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Phillips, Joseph M, 1987. "A Comment on Farmer Education and Farm Efficiency: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 35(3), pages 637-641, April.
    2. Huffman, Wallace E, 1980. "Farm and Off-Farm Work Decisions: The Role of Human Capital," The Review of Economics and Statistics, MIT Press, vol. 62(1), pages 14-23, February.
    3. Gurgand, Marc, 2003. "Farmer education and the weather: evidence from Taiwan (1976-1992)," Journal of Development Economics, Elsevier, vol. 71(1), pages 51-70, June.
    4. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
    5. Yang, Dennis Tao & An, Mark Yuying, 2002. "Human capital, entrepreneurship, and farm household earnings," Journal of Development Economics, Elsevier, vol. 68(1), pages 65-88, June.
    6. Akinwumi A. Adesina & Kouakou K. Djato, 1996. "Farm size, relative efficiency and agrarian policy in Côte d'Ivoire: profit function analysis of rice farms," Agricultural Economics, International Association of Agricultural Economists, vol. 14(2), pages 93-102, July.
    7. Lockheed, Marlaine E & Jamison, Dean T & Lau, Lawrence J, 1980. "Farmer Education and Farm Efficiency: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 29(1), pages 37-76, October.
    8. Zvi Griliches, 1957. "Specification Bias in Estimates of Production Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 39(1), pages 8-20.
    9. Marcel Fafchamps & Agnes R. Quisumbing, 1999. "Human Capital, Productivity, and Labor Allocation in Rural Pakistan," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 369-406.
    10. Adesina, Akinwumi A. & Djato, Kouakou K., 1996. "Farm size, relative efficiency and agrarian policy in Cote d'Ivoire: profit function analysis of rice farms," Agricultural Economics, Blackwell, vol. 14(2), pages 93-102, July.
    11. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023, Elsevier.
    12. Foster, Andrew D & Rosenzweig, Mark R, 1996. "Technical Change and Human-Capital Returns and Investments: Evidence from the Green Revolution," American Economic Review, American Economic Association, vol. 86(4), pages 931-953, September.
    13. J. Edward Taylor & Antonio Yunez-Naude, 2000. "The Returns from Schooling in a Diversified Rural Economy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 287-297.
    14. Tao Yang, Dennis, 2004. "Education and allocative efficiency: household income growth during rural reforms in China," Journal of Development Economics, Elsevier, vol. 74(1), pages 137-162, June.
    15. Schultz, T. Paul, 1988. "Education investments and returns," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 13, pages 543-630, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yang, Dennis Tao & An, Mark Yuying, 2002. "Human capital, entrepreneurship, and farm household earnings," Journal of Development Economics, Elsevier, vol. 68(1), pages 65-88, June.
    2. repec:eee:labchp:v:3:y:1999:i:pb:p:2859-2939 is not listed on IDEAS
    3. Jolliffe, Dean, 2004. "The impact of education in rural Ghana: examining household labor allocation and returns on and off the farm," Journal of Development Economics, Elsevier, vol. 73(1), pages 287-314, February.
    4. Tao Yang, Dennis, 2004. "Education and allocative efficiency: household income growth during rural reforms in China," Journal of Development Economics, Elsevier, vol. 74(1), pages 137-162, June.
    5. Phanhpakit ONPHANHDALA, 2009. "Farmer Education and Agricultural Efficiency: Evidence from Lao PDR," GSICS Working Paper Series 20, Graduate School of International Cooperation Studies, Kobe University.
    6. Maxwell Mkondiwa, 2023. "Is wealth found in the soil or in the brain? Investing in farm people in Malawi," Review of Development Economics, Wiley Blackwell, vol. 27(1), pages 134-157, February.
    7. Thomas Ferreira, 2018. "Does education enhance productivity in smallholder agriculture? Causal evidence from Malawi," Working Papers 05/2018, Stellenbosch University, Department of Economics.
    8. Mkondiwa, M., 2018. "Is wealth found in the soil or brain? Investing in farm people in Malawi," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275914, International Association of Agricultural Economists.
    9. Orazem, Peter F. & King, Elizabeth M., 2008. "Schooling in Developing Countries: The Roles of Supply, Demand and Government Policy," Handbook of Development Economics, in: T. Paul Schultz & John A. Strauss (ed.), Handbook of Development Economics, edition 1, volume 4, chapter 55, pages 3475-3559, Elsevier.
    10. Marcel Fafchamps & Agnes R. Quisumbing, 1999. "Human Capital, Productivity, and Labor Allocation in Rural Pakistan," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 369-406.
    11. Vandenbosch, Tom & Nanok, Tutui & Tollens, Eric, 2004. "The Role Of Relevant Basic Education In Achieving Food Security And Sustainable Rural Development," Working Papers 31843, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    12. Gurgand, Marc, 2003. "Farmer education and the weather: evidence from Taiwan (1976-1992)," Journal of Development Economics, Elsevier, vol. 71(1), pages 51-70, June.
    13. Jaretzky, Huong & Liebenehm, Sabine & Waibel, Hermann, 2022. "Farmers' Knowledge and Farm Productivity in Rural Thailand and Vietnam," Hannover Economic Papers (HEP) dp-702, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    14. Alejandro Ramirez & Gustav Ranis, 1997. "Economic Growth and Human Development," Working Papers 787, Economic Growth Center, Yale University.
    15. Laszlo, Sonia, 2008. "Education, Labor Supply, and Market Development in Rural Peru," World Development, Elsevier, vol. 36(11), pages 2421-2439, November.
    16. Alan De Brauw & Scott Rozelle, 2008. "Reconciling the Returns to Education in Off‐Farm Wage Employment in Rural China," Review of Development Economics, Wiley Blackwell, vol. 12(1), pages 57-71, February.
    17. Pham, Huong Dien & Waibel, Hermann, 2018. "Risk attitudes, knowledge, skills and agricultural productivity," TVSEP Working Papers wp-007, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    18. repec:qeh:qehwps:qehwps32 is not listed on IDEAS
    19. ERREYGERS, Guido & FEREDE, Tadele, 2009. "The end of subsistence farming: Growth dynamics and investments in human and environmental capital in rural Ethiopia," Working Papers 2009008, University of Antwerp, Faculty of Business and Economics.
    20. Gustav Ranis, 2000. "Strategies for Success in Human Development," Working Papers 808, Economic Growth Center, Yale University.
    21. Yang, Dennis Tao, 2005. "Determinants of schooling returns during transition: Evidence from Chinese cities," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 244-264, June.
    22. Simon Appleton & Arsene Balihuta, 1996. "Education and agricultural productivity: Evidence from Uganda," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(3), pages 415-444.

    More about this item

    Keywords

    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea05:19207. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.