IDEAS home Printed from https://ideas.repec.org/p/ags/ubzefd/256284.html
   My bibliography  Save this paper

Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data

Author

Listed:
  • Sakketa, Tekalign Gutu
  • Gerber, Nicolas

Abstract

The majority of the youth in Ethiopia live in rural areas where agriculture is the main source of livelihood. Using gender- and age-specific values of agricultural labor return (shadow wages), we systematically analyse trends, patterns and prospects of youth’s labor supply in agriculture across space (farm locations). We also analyse whether the household male and female youth members’ agricultural labor supply is responsive to economic incentives. We investigate these using shadow wages estimation techniques applied to farm-household panel data collected during the 2010/11 and 2014/15 agricultural seasons. The results indicate that trends and patterns of the youth’s involvement in agriculture vary across gender and farm work locations, and so do their labor returns. Yet the on-farm participation for youth members is declining across time irrespective of gender, whilst their participation in off-farm activities is increasing. The findings also suggest that changes in agricultural shadow wages matter for the youth’s involvement in the sector, but their impact differs for male and female youth. The results are consistent after controlling for individual heterogeneity, sample selection and instrumenting for possible endogeneity. In addition, we find that youth’s intentions and actual engagement in agricultural production vary greatly. This suggests that the frequent narrative of youth disengaging from agriculture may be a result of methodological flaws or data limitations. Taking into account the intensity of the youth’s involvement in family farm, own farm and off-farm work, the results challenge the presumption that youth are abandoning agriculture, at least in agricultural potential areas of Ethiopia. Instead the youth’s involvement makes an important economic contribution to the operation of the family farm. Therefore, it is necessary to invest in agricultural development to enhance productivity and employment opportunities; and structural transformation that addresses the imperfections and rigidities in labor and other input markets to make agriculture more attractive to youth.

Suggested Citation

  • Sakketa, Tekalign Gutu & Gerber, Nicolas, 2017. "Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data," Discussion Papers 256284, University of Bonn, Center for Development Research (ZEF).
    • Handle: RePEc:ags:ubzefd:256284
    DOI: 10.22004/ag.econ.256284
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/256284/files/DP%20236.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.256284?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dessing, Maryke, 2002. "Labor supply, the family and poverty: the S-shaped labor supply curve," Journal of Economic Behavior & Organization, Elsevier, vol. 49(4), pages 433-458, December.
    2. Emmanuel Skoufias, 1994. "Using Shadow Wages to Estimate Labor Supply of Agricultural Households," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 215-227.
    3. Bezu, Sosina & Barrett, Christopher B. & Holden, Stein T., 2012. "Does the Nonfarm Economy Offer Pathways for Upward Mobility? Evidence from a Panel Data Study in Ethiopia," World Development, Elsevier, vol. 40(8), pages 1634-1646.
    4. Catherine Benjamin & Ayal Kimhi, 2006. "Farm work, off-farm work, and hired farm labour: estimating a discrete-choice model of French farm couples' labour decisions," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(2), pages 149-171, June.
    5. T. Paul Schultz, 1999. "Women's Role in the Agricultural Household: Bargaining and Human Capital," Working Papers 803, Economic Growth Center, Yale University.
    6. Agwu, Nnanna Mba & Nwankwo, Emmanuel Eze & Anyanwu, Cynthia Ijeoma, 2014. "Determinants Of Agricultural Labour Participation Among Youths In Abia State, Nigeria," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(1), pages 1-8, January.
    7. Mark Aguiar & Erik Hurst, 2007. "Measuring Trends in Leisure: The Allocation of Time Over Five Decades," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(3), pages 969-1006.
    8. Juhn, Chinhui & Murphy, Kevin M, 1997. "Wage Inequality and Family Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 72-97, January.
    9. Bachewe, Fantu Nisrane & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu Seyoum, 2016. "Synopsis: Non-farm income and labor markets in rural Ethiopia," ESSP research notes 61, International Food Policy Research Institute (IFPRI).
    10. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
    11. Joe Dewbre, 2006. "The Impact of Coupled and Decoupled Government Subsidies on Off-Farm Labor Participation of U.S. Farm Operators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 393-408.
    12. Bachewe, Fantu Nisrane & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu Seyoum, 2016. "Non-farm income and labor markets in rural Ethiopia," ESSP working papers 90, International Food Policy Research Institute (IFPRI).
    13. Nijman, Theo & Verbeek, Marno, 1992. "Nonresponse in Panel Data: The Impact on Estimates of a Life Cycle Consumption Function," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(3), pages 243-257, July-Sept.
    14. Bezu, Sosina & Holden, Stein, 2014. "Are Rural Youth in Ethiopia Abandoning Agriculture?," World Development, Elsevier, vol. 64(C), pages 259-272.
    15. Ekaterini Kyriazidou, 1997. "Estimation of a Panel Data Sample Selection Model," Econometrica, Econometric Society, vol. 65(6), pages 1335-1364, November.
    16. Benjamin, Catherine & Kimhi, Ayal, 2003. "Farm Work, Off-Farm Work, And Hired Farm Labor: Estimating A Discrete-Choice Model Of French Farm Couples' Labor Decisions," Discussion Papers 14990, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    17. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-529, October.
    18. Semykina, Anastasia & Wooldridge, Jeffrey M., 2010. "Estimating panel data models in the presence of endogeneity and selection," Journal of Econometrics, Elsevier, vol. 157(2), pages 375-380, August.
    19. Amsalu Bedemo & Kindie Getnet & Belay Kassa, 2013. "Determinants of Household Demand for and Supply of Farm Labour in Rural Ethiopia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 16(3), pages 351-367.
    20. Hanan G. Jacoby, 1993. "Shadow Wages and Peasant Family Labour Supply: An Econometric Application to the Peruvian Sierra," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(4), pages 903-921.
    21. Lopez, Ramon E., 1984. "Estimating labor supply and production decisions of self-employed farm producers," European Economic Review, Elsevier, vol. 24(1), pages 61-82.
    22. Dupraz, Pierre & Latruffe, Laure, 2015. "Trends in family labour, hired labour and contract work on French field crop farms: The role of the Common Agricultural Policy," Food Policy, Elsevier, vol. 51(C), pages 104-118.
    23. Murtazashvili, Irina & Wooldridge, Jeffrey M., 2008. "Fixed effects instrumental variables estimation in correlated random coefficient panel data models," Journal of Econometrics, Elsevier, vol. 142(1), pages 539-552, January.
    24. Chang, Yang-Ming & Huang, Biing-Wen & Chen, Yun-Ju, 2012. "Labor supply, income, and welfare of the farm household," Labour Economics, Elsevier, vol. 19(3), pages 427-437.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Muuz Hadush, 2017. "Implication of Animal Feed and Water Scarcity on Labor Allocation, Food Production and Per Capita Food Consumption in Tigrai Region, Ethiopia," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(4), pages 59-93, December.
    2. Congdon Fors, Heather & Houngbedji, Kenneth & Lindskog, Annika, 2019. "Land certification and schooling in rural Ethiopia," World Development, Elsevier, vol. 115(C), pages 190-208.
    3. Romanus Osabohien & Alexander Nimo Wiredu & Paul Matin Dontsop Nguezet & Djana Babatima Mignouna & Tahirou Abdoulaye & Victor Manyong & Zoumana Bamba & Bola Amoke Awotide, 2021. "Youth Participation in Agriculture and Poverty Reduction in Nigeria," Sustainability, MDPI, vol. 13(14), pages 1-19, July.
    4. Denise Hörner & Meike Wollni, 2022. "Does integrated soil fertility management increase returns to land and labor?: Plot‐level evidence from Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 337-355, May.
    5. Kouakou Kouakou, Paul-Alfred, 2020. "Role of trade in natural rubber and palm oil in the composition of GDP in Ivory Coast," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 6(3), September.
    6. Mirzabaev, Alisher, 2021. "Impacts of Extreme Weather Events Under Changing Climate on Household Consumption and Assets Inequality in Uganda," 2021 Conference, August 17-31, 2021, Virtual 315872, International Association of Agricultural Economists.

    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. Gutu, Tekalign, 2016. "Are rural youth disengaging from agriculture? Empirical evidence from Ethiopia," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246925, African Association of Agricultural Economists (AAAE).
    2. Tocco, Barbara & Davidova, Sophia & Bailey, Alastair Creation-Date: 2012-02, "undated". "Key Issues in Agricultural Labour Markets: A Review of Major Studies and Project Reports on Agriculture and Rural Labour Markets," Factor Markets Working Papers 126, Centre for European Policy Studies.
    3. Wang, Xiaobing, 2007. "Labor market behavior of Chinese rural households during transition," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 42, number 92321.
    4. Chang, Yang-Ming & Huang, Biing-Wen & Chen, Yun-Ju, 2012. "Labor supply, income, and welfare of the farm household," Labour Economics, Elsevier, vol. 19(3), pages 427-437.
    5. Jia, Lili, 2012. "Land fragmentation and off-farm labor supply in China," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 66, number 66.
    6. Federico Perali & Furio Rosati & Martina Menon, 2004. "Estimation of the Contribution of Child Labour to the Formation of Rural Incomes: An Application to Nepal," CHILD Working Papers wp10_05, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    7. Tocco, Barbara & Davidova, Sophia & Bailey, Alastair Creation-Date: 2012-02, "undated". "Supply and Demand Side Limitations Affecting the Structure of Agriculture and the Rural Economy," Factor Markets Working Papers 124, Centre for European Policy Studies.
    8. Wang, Xiaobing & Herzfeld, Thomas & Glauben, Thomas, 2007. "Labor allocation in transition: Evidence from Chinese rural households," China Economic Review, Elsevier, vol. 18(3), pages 287-308.
    9. Almeida, Alexandre N. & Bravo-Ureta, Boris E., 2019. "Agricultural productivity, shadow wages and off-farm labor decisions in Nicaragua," Economic Systems, Elsevier, vol. 43(1), pages 99-110.
    10. Bagamba, Fredrick & Burger, Kees & Kuyvenhoven, Arie, 2007. "Determinants of smallholder farmer labour allocation decisions in Uganda," 106th Seminar, October 25-27, 2007, Montpellier, France 7920, European Association of Agricultural Economists.
    11. Béatrice D'HOMBRES & Jean-Louis ARCAND, 2006. "Testing for Separation in Agricultural Household Models and Unobservable Household-Specific Effects," Working Papers 200632, CERDI.
    12. Laura Barasa & Bethuel K. Kinuthia & Abdelkrim Araar & Stephene Maende & Faith Mariera, 2023. "Nonfarm entrepreneurship, crop output, and household welfare in Tanzania: An exploration of transmission channels," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 762-792, July.
    13. Bowlus, Audra J. & Sicular, Terry, 2003. "Moving toward markets? Labor allocation in rural China," Journal of Development Economics, Elsevier, vol. 71(2), pages 561-583, August.
    14. Kamau, Mercy W. & Burger, Kees & Giller, Ken E., 2007. "Labour allocative efficiency and factors influencing farm households interaction with the labour market," 106th Seminar, October 25-27, 2007, Montpellier, France 7947, European Association of Agricultural Economists.
    15. Bethuel Kinuthia & Abdelkrim Araar & Laura Barasa & Stephene Maende & Faith Mariera, 2019. "Off-Farm Participation, Agricultural Production and Farmers’ Welfare in Tanzania and Uganda," Working Papers PMMA 2019-01, PEP-PMMA.
    16. Bartolini, Fabio & Brunori, Gianluca & Coli, Alessandra & Landi, Chiara & Pacini, Barbara, 2015. "Assessing the Causal Effect of Decoupled Payments on farm labour in Tuscany Using Propensity Score Methods," 2015 Conference, August 9-14, 2015, Milan, Italy 211200, International Association of Agricultural Economists.
    17. Henning, Christian H.C.A. & Henningsen, Arne, 2005. "Modeling Price Response of Farm Households Under Imperfect Labor Markets: A Farm Household Approach to Family Farms in Poland," 94th Seminar, April 9-10, 2005, Ashford, UK 24431, European Association of Agricultural Economists.
    18. Satoshi KOJIMA, 2010. "Quantitative Assessment of Biofuel Promotion Policy in India: A Dynamic CGE Approach," EcoMod2010 259600093, EcoMod.
    19. Vakis, Renos & Sadoulet, Elisabeth & de Janvry, Alain & Cafiero, Carlo, 2004. "Testing for Separability in Household Models with Heterogeneous Behavior: A Mixture Model Approach," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4hs3g5dj, Department of Agricultural & Resource Economics, UC Berkeley.
    20. Jean-Paul Chavas & Ragan Petrie & Michael Roth, 2005. "Farm Household Production Efficiency: Evidence from The Gambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 160-179.

    More about this item

    Keywords

    Consumer/Household Economics; Labor and Human Capital;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ubzefd:256284. 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/zefbnde.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.