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How Costly is it for Poor Farmers to Lift Themselves out of Subsistence?

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  • Cadot, Olivier
  • Dutoit, Laure
  • Olarreaga, Marcelo

Abstract

The main objective of this paper is to provide estimates of the cost of moving out of subsistence for Madagascar's farmers. The analysis is based on a simple asset-return model of occupational choice. Estimates suggest that the entry (sunk) cost associated with moving out of subsistence can be quite large somewhere between 124 and 153 percent of a subsistence farmer's annual production. Our results make it possible to identify farm characteristics likely to generate large gains if moved out of subsistence, yielding useful information for the targeting of trade-adjustment assistance programs.

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  • Cadot, Olivier & Dutoit, Laure & Olarreaga, Marcelo, 2005. "How Costly is it for Poor Farmers to Lift Themselves out of Subsistence?," CEPR Discussion Papers 5392, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5392
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    2. Tigist Mekonnen Melesse, 2015. "Agricultural Technology Adoption and Market Participation under Learning Externality: Impact Evaluation on Small-scale Agriculture from Rural Ethiopia," Working Papers 2015/06, Maastricht School of Management.
    3. Mekonnen, Tigist, 2017. "Impact of agricultural technology adoption on market participation in the rural social network system," MERIT Working Papers 2017-008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Narayanan, Sudha, 2014. "Profits from participation in high value agriculture: Evidence of heterogeneous benefits in contract farming schemes in Southern India," Food Policy, Elsevier, vol. 44(C), pages 142-157.

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    More about this item

    Keywords

    entry costs; Madagascar; subsistence; switching regression; threshold regression; unknown sample separation;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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