IDEAS home Printed from https://ideas.repec.org/p/hwe/certdp/0403.html
   My bibliography  Save this paper

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

Author

Listed:
  • Cornilius Chikwama

Abstract

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.

Suggested Citation

  • Cornilius Chikwama, 2004. "Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe," CERT Discussion Papers 0403, Centre for Economic Reform and Transformation, Heriot Watt University.
    • Handle: RePEc:hwe:certdp:0403
    as

    Download full text from publisher

    File URL: http://www2.hw.ac.uk/sml/downloads/cert/wpa/2004/dp0403.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michael R. Carter & Keith D. Wiebe, 1990. "Access to Capital and Its Impact on Agrarian Structure and Productivity in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(5), pages 1146-1150.
    2. A Corsi & JL Findeis, 2000. "True state dependence and heterogeneity in off-farm labour participation," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(2), pages 127-151, June.
    3. 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).
    4. L. F. Giblin., 1940. "Economic Progress," The Economic Record, The Economic Society of Australia, vol. 16(2), pages 262-270, December.
    5. Frank Ellis, 1998. "Household strategies and rural livelihood diversification," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-38.
    6. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, vol. 26(4), pages 315-331, August.
    7. Bruce, Judith, 1989. "Homes divided," World Development, Elsevier, vol. 17(7), pages 979-991, July.
    8. 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 141-172, May.
    9. Weiss, Christoph R, 1997. "Do They Come Back Again? The Symmetry and Reversibility of Off-Farm Employment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(1), pages 65-84.
    10. 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.
    11. 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.
    12. 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.
    13. Ellis, Frank, 2000. "Rural Livelihoods and Diversity in Developing Countries," OUP Catalogue, Oxford University Press, number 9780198296966.
    14. 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.
    15. 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.
    16. Kimseyinga Savadogo & Thomas Reardon & Kyosti Pietola, 1994. "Farm Productivity in Burkina Faso: Effects of Animal Traction and Nonfarm Income," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 608-612.
    17. Lanjouw, Peter, 2001. "Nonfarm Employment and Poverty in Rural El Salvador," World Development, Elsevier, vol. 29(3), pages 529-547, March.
    18. Gordon L. Carriker & Michael R. Langemeier & Ted C. Schroeder & Allen M. Featherstone, 1993. "Propensity to Consume Farm Family Disposable Income from Separate Sources," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 739-744.
    19. Barrett, Christopher B. & Bezuneh, Mesfin & Clay, Daniel C. & Reardon, Thomas, 2001. "Heterogeneous Contraints, Incentives, and Income Diversification Strategies in Rural Africa," Working Papers 179567, Cornell University, Department of Applied Economics and Management.
    20. 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.
    21. Folbre, Nancy, 1986. "Hearts and spades: Paradigms of household economics," World Development, Elsevier, vol. 14(2), pages 245-255, February.
    22. Bardhan, Pranab & Udry, Christopher, 1999. "Development Microeconomics," OUP Catalogue, Oxford University Press, number 9780198773719.
    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. Thia Hennessy & Mark O’ Brien, 2007. "Is off-farm income driving on-farm investment?," Working Papers 0704, Rural Economy and Development Programme,Teagasc.
    2. Mathenge, Mary K. & Tschirley, David L., 2008. "Off-Farm Work and Farm Production Decisions: Evidence from Maize-Producing Households in Rural Kenya," Working Papers 202609, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    3. Li Li & Atsushi Tsunekawa & Yangshangyu Zuo & Atsushi Koike, 2019. "Conservation Payments and Technical Efficiency of farm Households Participating in the Grain for Green Program on the Loess Plateau of China," Sustainability, MDPI, vol. 11(16), pages 1-16, August.
    4. S Subramanian, 2018. "Participation of rural households in farm, non-farm and pluri-activity: Evidences from India," Working Papers 412, Institute for Social and Economic Change, Bangalore.
    5. Smale, Melinda & Mathenge, Mary K. & Opiyo, Joseph, 2015. "Nonfarm Work and Fertilizer Use Among Smallholder Farmers in Kenya: A Cross-Crop Comparison," Working Papers 206441, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    6. Ma, Wanglin & Renwick, Alan & Grafton, Quentin, 2018. "Farm machinery use, off-farm employment and farm performance in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(2), April.

    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. Cornilius Chikawama, 2004. "Quota Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe," Working Papers E04, Department of Economics, School of Management and Languages, Heriot Watt University.
    2. Taruvinga, Amon & Mushunje, Abbyssinia, 2012. "Buffer zone income dynamics for the sub-district producer community: Implications for rural off-farm income, income inequality and the development of household agriculture," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126377, International Association of Agricultural Economists.
    3. Gamel Abdul-Nasser Salifu, 2019. "The Political Economy Dynamics of Rural Household Income Diversification: A Review of the International Literature," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 273-290, December.
    4. Vellema, W. & Buritica Casanova, A. & Gonzalez, C. & D’Haese, M., 2015. "The effect of specialty coffee certification on household livelihood strategies and specialisation," Food Policy, Elsevier, vol. 57(C), pages 13-25.
    5. Pham, Hung T, 2006. "Rural Nonfarm Employment Under Trade Reform Evidence From Vietnam, 1993-2002," MPRA Paper 6476, University Library of Munich, Germany.
    6. Stifel, David, 2010. "The rural non-farm economy, livelihood strategies and household welfare," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 4(1), March.
    7. Asfaw, Solomon & McCarthy, Nancy & Paolantonio, Adriana & Cavatassi, Romina & Amare, Mulubrhan & Lipper, Leslie, 2015. "Diversification, Climate Risk and Vulnerability to Poverty: Evidence from Rural Malawi," 2015 Conference, August 9-14, 2015, Milan, Italy 230216, International Association of Agricultural Economists.
    8. Chikwama, Cornilius, 2010. "The role of rural off-farm employment in agricultural development among farm households in low-income countries: Evidence from Zimbabwe," Journal of Cooperatives, NCERA-210, vol. 4(1), March.
    9. Bezu, Sosina & Barrett, Christopher B., 2010. "Activity Choice in Rural Non-farm Employment (RNFE): Survival versus accumulative strategy," MPRA Paper 55034, University Library of Munich, Germany.
    10. Nilsson, Pia & Backman, Mikaela & Bjerke, Lina & Maniriho, Aristide, 2019. "One cow per poor family: Effects on the growth of consumption and crop production," World Development, Elsevier, vol. 114(C), pages 1-12.
    11. Ersado, Lire, 2006. "Income diversification in Zimbabwe : welfare implications from urban and rural areas," Policy Research Working Paper Series 3964, The World Bank.
    12. Olale, Edward & Nazli, Hina, 2010. "The Influence of Market Barriers and Farm Income Risk on Non-Farm Income Diversification," Annual Meeting, 2010, Denver Colorado, July 25-27 60915, Canadian Agricultural Economics Society.
    13. Wassie Berhanu & David Colman & Bichaka Fayissa, 2007. "Diversification and livelihood sustainability in a semi-arid environment: A case study from southern Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 43(5), pages 871-889.
    14. Adugna, Lemi, 2009. "Determinants of Income Diversification in Rural Ethiopia: evidence From Panel Data," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 18(1), pages 116-116, December.
    15. 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.
    16. Maja Micevska & Dil Bahadur Rahut, 2008. "Rural Nonfarm Employment and Incomes in the Himalayas," Economic Development and Cultural Change, University of Chicago Press, vol. 57(1), pages 163-193, October.
    17. Ersado, Lire, 2005. "Small-scale irrigation dams, agricultural production, and health - theory and evidence from Ethiopia," Policy Research Working Paper Series 3494, The World Bank.
    18. Béatrice D'HOMBRES & Jean-Louis ARCAND, 2006. "Testing for Separation in Agricultural Household Models and Unobservable Household-Specific Effects," Working Papers 200632, CERDI.
    19. Poignant, Adrian, 2023. "Small-scale mining and agriculture: Evidence from northwestern Tanzania," Resources Policy, Elsevier, vol. 83(C).
    20. Nguyen, Huy, 2014. "The effect of land fragmentation on labor allocation and the economic diversity of farm households: The case of Vietnam," MPRA Paper 57521, University Library of Munich, Germany.

    More about this item

    Keywords

    off-farm income; rural wage employment; farm capital; agricultural development;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

    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:hwe:certdp:0403. 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: Colin Miller (email available below). General contact details of provider: https://edirc.repec.org/data/cehwuuk.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.