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

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  • Cornilius Chikawama

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 "deagrarianisation". 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 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.
    • Handle: RePEc:hwe:hwecwp:2004-e04
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    Keywords

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    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

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