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Determinants of Time Allocation to Rural Non-Farm Activities in Central America: The Role of Infrastructure and EducationI

Listed author(s):
  • Barron, Manuel
  • Torero, Maximo

We estimate a bivariate Tobit model to find the main determinants of time allocation to rural nonfarm employment (RNFE) among rural households in four Central American countries: ElSalvador, Guatemala, Honduras, and Nicaragua. The main effects stem from gender and schooling of the household head, as well as access to infrastructure, with evidence of infrastructure complementarities, i.e. we identify increasing share of nonfarm activities when the household has simultaneously more than one infrastructure. Households from the poorest income quartile would allocate between 3 (Guatemala) to 8 (El Salvador) additional hours to nonfarm activities if they increase their access from 0 to 2 types of infrastructure. This apparently small change in time allocation (substituting time in farm by time out of the farm, leaving leisure intact) would have non-negligible impacts in income, which would increase by 6% in Guatemala and 11% in El Salvador. Moreover, infrastructure access variables are positive for all income quartiles, but the marginal effect is positively correlated with income, i.e. the poor would benefit less than the rich... Finally, the model also shows an inverted U-shape in the relationship between the expected number of hours in RNFE and income. The more the households specialize in agriculture the less time they allocate to RFN. The richest households (roughly the top 1%) specialize in agriculture and thus allocate less time (zero in the case of El Salvador and Guatemala) to RNFE.

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File URL: https://mpra.ub.uni-muenchen.de/61421/1/MPRA_paper_61421.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 61421.

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Date of creation: 2012
Handle: RePEc:pra:mprapa:61421
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  2. Reardon, Thomas, 1997. "Using evidence of household income diversification to inform study of the rural nonfarm labor market in Africa," World Development, Elsevier, vol. 25(5), pages 735-747, May.
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  9. Levenson, Alec R, 2000. "The Role of Agricultural and Female Labor Mobility in Taiwan's Industrialization: 1976-91," Review of Development Economics, Wiley Blackwell, vol. 4(1), pages 101-119, February.
  10. Haggblade, Steven & Hazell, Peter B. R. & Reardon, Thomas Anthony (ed.), 2007. "Transforming the rural nonfarm economy: Opportunities and threats in the developing world," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-8018-8664-5.
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