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Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe

  • Cornilius Chikwama
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    This study examines the widely held view that rural off-farm income, in particular that earned from rural wage employment, may assist households in overcoming credit constraints when making farm investments. The analytical results of the study show that rural wage employment income can only assist in raising farm investment if it can be saved at positive rates and households face high-unemployment, i.e., they have idle labour. When there is no unemployment in the household or when unemployment is very low, increased availability of rural wage employment will in fact lead to "de-agrarianisation". Although the study finds evidence for high-unemployment from a 3-year panel data set of 359 households in 3 Resettlement Schemes in Zimbabwe, it finds no evidence that existing rural wage opportunities contribute towards raising households' farm investment. This is attributed to the fact that the savings rate for rural wage income is not significantly different from zero.

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    File URL: http://www.sml.hw.ac.uk/downloads/cert/wpa/2004/dp0403.pdf
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    Paper provided by Centre for Economic Reform and Transformation, Heriot Watt University in its series CERT Discussion Papers with number 0403.

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    Date of creation: 2004
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    Handle: RePEc:hwe:certdp:0403
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    1. Ellis, Frank, 2000. "Rural Livelihoods and Diversity in Developing Countries," OUP Catalogue, Oxford University Press, number 9780198296966, March.
    2. Bruce, Judith, 1989. "Homes divided," World Development, Elsevier, vol. 17(7), pages 979-991, July.
    3. Weiss, Christoph R, 1997. "Do They Come Back Again? The Symmetry and Reversibility of Off-Farm Employment," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 24(1), pages 65-84.
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    6. Barrett, Christopher B. & Bezuneh, Mesfin & Clay, Daniel C. & Reardon, Thomas, 2001. "Heterogeneous Constraints, Incentives And Income Diversification Strategies In Rural Africa," Working Papers 14761, Cornell University, Department of Applied Economics and Management.
    7. Lanjouw, Peter & Quizon, Jaime & Sparrow, Robert, 2001. "Non-agricultural earnings in peri-urban areas of Tanzania: evidence from household survey data," Food Policy, Elsevier, vol. 26(4), pages 385-403, August.
    8. Prabir C. Bhattacharya, 1998. "Migration, employment and development: a three-sector analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(7), pages 899-921.
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    11. A Corsi & JL Findeis, 2000. "True state dependence and heterogeneity in off-farm labour participation," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(2), pages 127-151, June.
    12. Prabir C. Bhattacharya, 2002. "Rural-to-urban migration in LDCS: a test of two rival models," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(7), pages 951-972.
    13. Jacoby, H.G., 1990. "Shadow Wages And Peasant Family Labor Supply; An Econometric Application To The Peruvian Sierra," Papers 73, World Bank - Living Standards Measurement.
    14. von Braun, Joachim & Pandya-Lorch, Rajul, 1991. "Income sources of malnourished people in rural areas: Microlevel information and policy implications," IFPRI working papers 5, International Food Policy Research Institute (IFPRI).
    15. Lipton, Michael, 1980. "Migration from rural areas of poor countries: The impact on rural productivity and income distribution," World Development, Elsevier, vol. 8(1), pages 1-24, January.
    16. Savadogo, Kimseyinga & Reardon, Thomas & Pietola, Kyosti, 1998. "Adoption of improved land use technologies to increase food security in Burkina Faso: relating animal traction, productivity, and non-farm income," Agricultural Systems, Elsevier, vol. 58(3), pages 441-464, November.
    17. Lanjouw, Peter, 2001. "Nonfarm Employment and Poverty in Rural El Salvador," World Development, Elsevier, vol. 29(3), pages 529-547, March.
    18. Collier, Paul, 1983. "Malfunctioning of African Rural Factor Markets: Theory and a Kenyan Example," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 45(2), pages 141-72, May.
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