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A Composite Fuzzy Indicator for Assessing Farm Household Potential for Non-farm Income Diversification

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  • Fritzsch, Jana

Abstract

European politicians encourage the income diversification of rural households through various measures. Although being aware of farm households’ potential for non-farm income diversification seems important for finely-targeting such policy measures, no attempt has thus far been made to summarise the various determinants of income diversification in a single figure. This contribution aims to close this gap. A composite fuzzy indicator that measures farm household potential for non-farm income diversification is developed and applied to 1,053 farm households in Bulgaria, Hungary, Poland, Romania, and Slovenia. The indicator summarises the incentives of and capacities for non-farm income diversification on the individual household member level, and on the household and regional levels to a single measure using fuzzy logic methodology. The composite fuzzy indicator performs well, and the results for the single farm households can easily be retraced. The indicator not only singles out the households that have the potential for non-farm income diversification, but also shows the reasons for this. Thus, the result for 1,053 farm households is not only that most of them have a high potential for non-farm income diversification, but also that the majority of these households are pushed in diversification due to the smallness of their farms. Only a few of the farm households act under pull conditions, i.e. diversification is not a necessity, but they could opt for profitable non-farm employment due to favourable age, education, and regional conditions. Decision-makers could utilise the composite fuzzy indicator to finely-target diversification measures to the multifaceted conditions of farm households.

Suggested Citation

  • Fritzsch, Jana, 2011. "A Composite Fuzzy Indicator for Assessing Farm Household Potential for Non-farm Income Diversification," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114349, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae11:114349
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    References listed on IDEAS

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    1. Frank Ellis, 1998. "Household strategies and rural livelihood diversification," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-38.
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    6. Csaki, Csaba & Lerman, Zvi, 2001. "Land And Farm Structure In Poland," Discussion Papers 14998, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    7. Möllers Judith & Fritzsch Jana & Buchenrieder Gertrud, 2008. "Farm and Non-farm Incomes of Rural Households in Slovenia Canonical Correlation Analysis," South East European Journal of Economics and Business, De Gruyter Open, vol. 3(2), pages 39-48, November.
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    More about this item

    Keywords

    composite indicator; fuzzy logic; rural non-farm income diversification; transition countries; Consumer/Household Economics; C65; J24; Q12; R23;

    JEL classification:

    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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