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Labor Productivity in Rural African Enterprises: Empirical Evidence from the LSMS-ISA

Author

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  • Nagler, Paula

    () (Erasmus University Rotterdam)

  • Naudé, Wim

    () (Maastricht University)

Abstract

Although non-farm enterprises are ubiquitous in rural Sub-Saharan Africa, little is yet known about their productivity. In this paper we contribute to filling this gap by providing estimates of labor productivity in enterprises for Ethiopia, Malawi, Nigeria, and Uganda. Using the World Bank's LSMS-ISA database, we find that rural enterprises are on average less productive than those in urban areas, and that female-owned enterprises are less productive than male-owned enterprises. By estimating Heckman selection and panel data models, we find that education and access to credit are associated with higher labor productivity, while households that experience shocks operate less productive enterprises. Furthermore we provide evidence that enterprises that operate throughout the year are more productive. We conclude that gender, education, shocks, access to finance, and location matter for labor productivity in rural Africa, and that policy decisions tackling the shortcomings could significantly contribute to a better business environment and increased labor productivity.

Suggested Citation

  • Nagler, Paula & Naudé, Wim, 2014. "Labor Productivity in Rural African Enterprises: Empirical Evidence from the LSMS-ISA," IZA Discussion Papers 8524, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp8524
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    Cited by:

    1. Nagler, Paula & Naudé, Wim, 2014. "Young Entrepreneurs in Rural Africa: Prevalence, Determinants, Productivity," IZA Discussion Papers 8564, Institute for the Study of Labor (IZA).
    2. Heshmati, Almas & Rashidghalam, Masoomeh, 2016. "Labour Productivity in Kenyan Manufacturing and Service Industries," IZA Discussion Papers 9923, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    entrepreneurship; informal sector; labor productivity; rural development; Sub-Saharan Africa;

    JEL classification:

    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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