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Does the nonfarm economy offer pathways for upward mobility? Evidence from a panel data study in Ethiopia

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  • Bezu, Sosina
  • Barrett, Christopher B.
  • Holden, Stein T.

Abstract

Empirical studies across many developing countries routinely document a positive correlation between participation in rural nonfarm employment and households’ wealth or income. This paper explores whether nonfarm employment leads to higher consumption expenditure growth in Ethiopia. We find that: 1) households’ consumption expenditure growth is positively correlated with the initial share of nonfarm income; 2) the growth elasticity of nonfarm income share is higher for wealthier households; and 3) the main source of growth for nonfarm participants comes from the higher rates of return participants enjoy on their human and physical capital.

Suggested Citation

  • Bezu, Sosina & Barrett, Christopher B. & Holden, Stein T., 2010. "Does the nonfarm economy offer pathways for upward mobility? Evidence from a panel data study in Ethiopia," MPRA Paper 35754, University Library of Munich, Germany, revised 2011.
  • Handle: RePEc:pra:mprapa:35754
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    3. Mathenge, Mary K. & Smale, Melinda, 2013. "Off-farm Income and Fertilizer Investments by Smallholder Farmers in Kenya," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161470, African Association of Agricultural Economists (AAAE).
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    5. Larson,Donald F. & Muraoka,Rie & Otsuka,Keijiro, 2016. "On the central role of small farms in African rural development strategies," Policy Research Working Paper Series 7710, The World Bank.
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    11. Michler, Jeffrey D. & Josephson, Anna L., 2017. "To Specialize or Diversify: Agricultural Diversity and Poverty Dynamics in Ethiopia," World Development, Elsevier, vol. 89(C), pages 214-226.
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    14. Josephson, Anna Leigh & Michler, Jeffrey D., 2015. "To Specialize or Diversify: Agricultural Diversity and Poverty Persistence in Ethiopia," 2015 Conference, August 9-14, 2015, Milan, Italy 212459, International Association of Agricultural Economists.
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    16. Musa Hasen Ahmed & Hiwot Mekonnen Mesfin, 2017. "The impact of agricultural cooperatives membership on the wellbeing of smallholder farmers: empirical evidence from eastern Ethiopia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-20, December.
    17. Mathenge, Mary K. & Smale, Melinda & Opiyo, Joseph, 2013. "Off-farm Work and Fertilizer Intensification among Smallholder Farmers in Kenya: A Cross-Crop Comparison," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150638, Agricultural and Applied Economics Association.
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    20. Kebebe, E. & Shibru, F., 2017. "Impact of alternative livelihood interventions on household welfare: Evidence from rural Ethiopia," Forest Policy and Economics, Elsevier, vol. 75(C), pages 67-72.
    21. Mintewab Bezabih & Andrea Mannberg & Eyerusalem Siba, 2014. "The land certification program and off-farm employment in Ethiopia," GRI Working Papers 168, Grantham Research Institute on Climate Change and the Environment.
    22. Solomon Zena Walelign, 2016. "Livelihood strategies, environmental dependency and rural poverty: the case of two villages in rural Mozambique," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 18(2), pages 593-613, April.
    23. Newman Carol & Kinghan Christina, 2015. "Social Capital, Political Connections, and Household Enterprises: Evidence from Vietnam," WIDER Working Paper Series 001, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    rural nonfarm; income dynamics; income diversification; Africa; Ethiopia; impact;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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