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A Test of Separability of Consumption and Production Decisions of Farm Households in Ethiopia

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  • Christophe Muller

    () ( Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)

Abstract

In this paper, we test and reject the separability of production and consumption decisions of agricultural households in Ethiopia, using data from a rural household survey conducted in 1994 and an estimated labour demand equation. We also elicit socio-demographic and asset variables that are positively linked with agricultural labour demands. These results reflect the limited development of fully organised labour markets in rural Ethiopia. They also imply that purely market-driven agricultural policies, e.g., price subsidies or taxes, may have only limited or perverse impacts, and should be complemented by policies directly affecting household decisions, such as food aid, technology transfer, free supply of fertilizers, etc.

Suggested Citation

  • Christophe Muller, 2014. "A Test of Separability of Consumption and Production Decisions of Farm Households in Ethiopia," AMSE Working Papers 1418, Aix-Marseille School of Economics, Marseille, France, revised May 2014.
  • Handle: RePEc:aim:wpaimx:1418
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    References listed on IDEAS

    as
    1. Dercon, Stefan & Christiaensen, Luc, 2011. "Consumption risk, technology adoption and poverty traps: Evidence from Ethiopia," Journal of Development Economics, Elsevier, vol. 96(2), pages 159-173, November.
    2. 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.
    3. Michael Kevane, 1996. "Agrarian Structure and Agricultural Practice: Typology and Application to Western Sudan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 236-245.
    4. Mani, Subha & Hoddinott, John & Strauss, John, 2012. "Long-term impact of investments in early schooling — Empirical evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 99(2), pages 292-299.
    5. Behrman, Jere R. & Foster, Andrew D. & Rosenzweig, Mark R., 1997. "The dynamics of agricultural production and the calorie-income relationship: Evidence from Pakistan," Journal of Econometrics, Elsevier, vol. 77(1), pages 187-207, March.
    6. 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.
    7. 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.
    8. Croppenstedt, Andre & Muller, Christophe, 2000. "The Impact of Farmers' Health and Nutritional Status on Their Productivity and Efficiency: Evidence from Ethiopia," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 475-502, April.
    9. Barrett, Christopher B., 1996. "On price risk and the inverse farm size-productivity relationship," Journal of Development Economics, Elsevier, vol. 51(2), pages 193-215, December.
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    Cited by:

    1. Touhami Abdelkhalek & Fouzia Ejjanoui, 2015. "Tests De Séparabilité dans les Decisioins des Menages Agricoles: Cas du Maroc," Working Papers 955, Economic Research Forum, revised Oct 2015.

    More about this item

    Keywords

    agricultural household; separability; Ethiopia;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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