The impact of migration on rural poverty and inequality: a case study in China

Large numbers of agricultural labor moved from the countryside to cities after the economic reforms in China. Migration and remittances play an important role in transforming the structure of rural household income. This article examines the impact of rural‐to‐urban migration on rural poverty and inequality in a mountainous area of Hubei province using the data of a 2002 household survey. Since migration income is a potential substitute for farm income, we present counterfactual scenarios of what rural income, poverty, and inequality would have been in the absence of migration. Our results show that, by providing alternatives to households with lower marginal labor productivity in agriculture, migration leads to an increase in rural income. In contrast to many studies that suggest that the increasing share of nonfarm income in total income widens inequality, this article offers support for the hypothesis that migration tends to have egalitarian effects on rural income for three reasons: (1) migration is rational self‐selection—farmers with higher expected return in agricultural activities and/or in local nonfarm activities choose to remain in the countryside while those with higher expected return in urban nonfarm sectors migrate; (2) households facing binding constraints of land supply are more likely to migrate; (3) poorer households benefit disproportionately from migration.     

Did the commodity price spike increase rural poverty? Evidence from a long‐run panel in Bangladesh

We assess the effects of the dramatic rise in agricultural commodity prices during 2007–2008 on income dynamics and poverty among rural households in Bangladesh. A unique panel data set allows us to put the effects of recent events in the context of long‐run trends in income and poverty. We use data from a nationally representative longitudinal survey of rural households in Bangladesh collected in four waves in 1988, 2000, 2004, and 2008. Nargis and Hossain (Nargis, N., Hossain, M., 2006. Income dynamics and pathways out of rural poverty in Bangladesh, 1988–2004. Agric. Econ. 35, 425–435) analysed income dynamics and poverty incidence for the first three waves, finding a declining trend in both the incidence and severity of poverty, aided in particular by human capital development and off‐farm employment opportunities. We update and extend the analysis to include data collected in 2008, at the height of a spike in agricultural prices. We find that the price of a balanced food basket increased by more than 50% during 2000–2008, while household income rose only 15%. As a result the incidence and severity of rural poverty in Bangladesh sunk to pre‐2000 levels during 2004–2008. Thus, the price spikes in 2007–2008 helped push an additional 13 million people into poverty in rural Bangladesh. Moreover, we find that the determinants of poverty have not been time‐invariant. In particular, agricultural production, which had previously been associated with a higher incidence of poverty, served as a hedge against higher food prices during 2004–2008.     

Impact of conservation agriculture technology on household welfare in Zambia

This article examines the determinants and impact of conservation agriculture (CA) technology adoption on farm household welfare in Zambia. To account for selection bias from both observable and unobservable factors, an endogenous switching regression model is employed to estimate the impact of the technology on continuous outcomes like farm output, throughput accounting ratio (TAR), poverty gap, and severity of poverty. A recursive bivariate probit model is however used for the estimation of impact of adoption on a binary outcome like poverty headcount. The empirical findings demonstrate that the adoption of CA technology increases maize output, and farm TAR and reduces household poverty. Moreover, the results reveal that farmers’ years of schooling, social networks, access to credit, extension services, and machinery as well as soil quality positively influence adoption of CA technology.     

Designing and evaluating sustainable development pathways for semi‐subsistence crop–livestock systems: lessons from Kenya

Achieving the Sustainable Development Goals (SDGs) in African agriculture requires a better understanding why high levels of poverty and resource degradation persist in African agriculture despite decades of policy interventions and development projects. In this article, we hypothesize that policies need to account for the key features of the semi‐subsistence crop–livestock systems (CLS) in the region to become effective. The semi‐subsistence CLS are characterized by a high degree of biophysical and economic heterogeneity and a complex, diversified production system involving a combination of subsistence and cash crops with livestock. We investigated the potential for interventions proposed by the Government of Kenya to meet the SDGs by 2030. The analysis uses an integrated modeling approach designed to deal with the key features of these systems. A strategy that stimulates rural development, increases farm size to a sustainable level, and reduces distortions and inefficiencies in input and output markets could lead to a sustainable development pathway and achieve the SDGs for rural households dependent on CLS.     

Pathways out of poverty in lagging regions: evidence from rural western China

How to reduce poverty in lagging regions remains much debated and underserved with solid empirical evidence. This study illustrates an empirical methodology to analyze the pathways households followed out of poverty and to explore their potential in the future using 2000–2004 rural household panel data from two lagging provinces of China, Inner Mongolia and Gansu. It finds that rising labor productivity in agriculture has been key in understanding poverty reduction in rural lagging areas of these provinces and that it still holds much promise. Circular migration has also been important in Gansu, though less so in Inner Mongolia. On average, rural diversification has not proven to contribute much to poverty reduction and income transfers and agricultural tax abolishment have only helped at the margin. The findings from these two case studies highlight that the scope for reducing poverty in rural lagging regions can still be substantial in agriculture, also when nonagriculture drives national growth.     

The effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural Kenya1

This study estimates the effects of a large discrete maize price increase on the welfare of a sample of rural Kenyan households. The usual first‐order welfare approximation formula is extended to a second‐order formula that allows for supply and demand responses to the price change. Results show that many rural households are not affected greatly by the price change, and there are about as many gainers as losers. However, these full sample results mask important differences across regions. Welfare gains generally take place in major production areas while losses are in areas where most households are net buyers of maize. Semiparametric methods are used to investigate the relationship between income and the size of the welfare effect, and poverty dominance techniques are applied to study the impacts of the maize price increase on rural poverty.     

Coping with flood: role of institutions in Bangladesh

The article examines the coping strategies that rural households adopted during the 1998 flood in Bangladesh and assesses its impact on household welfare, including coping and vulnerability. Both vulnerability and poverty have in general declined in Bangladesh. Yet, 60% of rural households adopted a coping of one type or another and about half of rural households were both vulnerable as well as found to adopt any coping mechanism during the 1998 flood. Household‐level panel data analysis confirms that the flood reduced both consumption and asset, and forced many households to adopt some coping mechanisms to mitigate the adverse effects of flood. Consequently, natural disaster such as flooding increases households' vulnerability to poverty. However, post‐flood bumper crop production and operation of targeted programs such as microfinance helped compensate the losses of flood.     

Agriculture and small towns in Africa

Africa is urbanizing rapidly. Yet most dual economy models focus on the sectoral rather than spatial dimensions of development. This article adopts a “dual–dual” approach to measuring rural/urban and farm/nonfarm linkages. We develop an economy‐wide model of Ethiopia that distinguishes between cities, towns, and rural areas. The model captures detailed sectoral and regional linkages, internal migration flows, and externalities from urban agglomeration. We find larger linkages between agricultural production and small towns and show that redirecting urban growth toward towns rather than cities leads to broader‐based economic growth and poverty reduction. In contrast, industry and services, particularly within cities, are far less effective in reaching rural areas and the poor. Africa's current urbanization pattern—toward major cities rather than towns—will weaken national growth–poverty linkages. Urbanization that takes advantage of the synergistic relationship between agriculture and small towns has the potential to result in a more inclusive growth trajectory.     

The role of nonfarm income in coping with the effects of drought in southern Mozambique

To reduce their dependence on subsistence agriculture, farm households in rural Africa may diversify their income sources by participating in the nonfarm sector. In years of drought, nonfarm income can also be part of the coping strategies. A multivariate sample selection model was used to analyze three years of data from a nationally representative household survey in Mozambique. The analysis was guided by the following three questions. During a drought year: (1) Do households increase their participation in nonfarm activities? (2) Are poorer households as likely as others to participate in and benefit from nonfarm activities? and (3) Which factors are associated with higher nonfarm incomes? The results suggest that households are more likely to engage in at least one nonfarm income‐generating activity during a drought year. Although poorer households are more likely to engage in nonfarm activities, they are less likely to participate in nonfarm activities of high return. The results suggest that policies reducing entry barriers (e.g., improved road infrastructure, micro‐credit schemes, and livestock promotion programs) and increasing education levels can facilitate income diversification, thus allowing rural households to better cope with the effects of drought. When designing polices, care must be taken to avoid exacerbating income inequality by targeting measures toward poorer and female‐headed households.     

Cash crop liberalization and poverty alleviation in Africa: evidence from Malawi

This article uses the case of burley tobacco liberalization in Malawi to investigate the efficacy of cash crop liberalization as an instrument for poverty alleviation in sub‐Saharan Africa. The principal justification for cash crop liberalization is that markets allow farm households to increase their incomes by producing that which provides the highest return to their productive resources and use the cash to buy consumption goods. Using a latent welfare model, we find that households that selected to grow cash crops had higher incomes than those that did not grow cash crops. However, we also find that due to the lumpiness and seasonality of cash crop incomes, higher household incomes, while increasing food purchases did not significantly affect per capita food intake. Irrespective of participation in cash crops, for much of the cropping season rural households seem to rely more on nonfarm income for expenditure and consumption smoothing.     

Urbanization and poverty reduction: the role of rural diversification and secondary towns1

A rather unique panel tracking more than 3,300 individuals from households in rural Kagera, Tanzania, during 1991/1994–2010 shows that about one out of two individuals/households who exited poverty did so by transitioning out of agriculture into the rural nonfarm economy or secondary towns. Only one out of seven exited poverty by migrating to the big cities, even though those moving to the city experienced on average faster consumption growth. Further analysis of a much larger cross‐country panel of 51 developing countries cannot reject that rural diversification and secondary town development lead to more inclusive growth patterns than metropolitization. Indications are that this follows because more of the poor find their way to the rural nonfarm economy and secondary towns, than to distant cities. The development discourse would benefit from shifting beyond the rural–urban dichotomy and focusing more instead on how best to urbanize and develop its rural nonfarm economy and secondary towns.     

Off‐farm labor market decisions and agricultural shocks among rural households in Kenya

Using household level data from rural Kenya, this article explores whether and how farm households respond to unfavorable agricultural production environments, including any ex post adjustments in off‐farm labor supply in response to unexpected weather shocks. While controlling for a wide range of educational, demographic, and other locational factors, we examine how long‐term weather conditions and specific rainfall shocks influence a household's decision to engage in, and their earnings from, the off‐farm labor market. We find that rural households engage in off‐farm work as a long‐term strategy to deal with the effects of anticipated weather conditions on their farming operations. The analysis does not reveal major short‐term adjustments in off‐farm engagement as a result of specific, unexpected rainfall shocks; these households do however rely on remittance income and petty agricultural wage labor under these circumstances. Holding other factors constant, and conditional on participation, households in areas with a more productive local agriculture tend to earn more from off‐farm work especially in the informal/business sector than their counterparts in regions with a less productive agriculture. As expected, a vibrant local economy in the form of public investment increases the probability of off‐farm participation.     

Does a “Blue Revolution” help the poor? Evidence from Bangladesh

The rapid growth in aquaculture production, globally and in Bangladesh is well documented. Over 2000–2010, per capita production of aquaculture grew 76%, while the consumer price of fish declined 45%. Previous studies have suggested pro‐poor effects of aquaculture based on fish production and consumption patterns. This study attempts to quantify the contribution of aquaculture to income growth and poverty reduction in Bangladesh, using household survey data and a microsimulation approach based on an expanded version of Deaton's concept of net benefit ratio. We estimate that aquaculture's contribution to income growth between 2000 and 2010 was 2.1%, including both price and quantity effects. This income growth was translated into poverty reduction of 1.7 percentage points. Although these estimates seem small, they represent almost 10% of the overall poverty reduction in Bangladesh during the first decade of the 21st century. Put differently, of the 18 million Bengalis who escaped poverty during 2000–2010, about 1.8 million of them managed to do so because of the rapid growth in aquaculture, which contributed to rural income while making fish more accessible to consumers.     

Asset‐based poverty transition and persistence in rural China

This article tests empirically for transition and persistence of poverty in rural China based on the theory of asset‐based poverty traps. It proposes an analytical framework mitigating the problem of endogenous switching between accumulation regimes and disentangling the true state‐dependence of poverty. Specifically, a dynamic asset threshold separating households into downward and upward mobility regimes is identified after taking households’ unobserved characteristics and observed regime‐differentiated accumulation strategies into account. The static analysis identifies causality running from settling into a downward mobility regime to the probability of poverty measured by consumption. Furthermore, allowing for endogenous initial poverty status, the dynamic analysis finds strong true state‐dependence in poverty. Households with the same characteristics are nearly twice as likely to be poor as if they had not previously switched to the accumulation regime. Assets below the dynamic threshold serve as a conduit through which poverty propagates itself. Factors that help to break this vicious circle are identified.     

Africa's changing farm size distribution patterns: the rise of medium‐scale farms

This study assesses changes over the past decade in the farm size distributions of Ghana, Kenya, Tanzania, and Zambia, drawing on two or more waves of nationally representative population‐based and/or area‐based surveys. Analysis indicates that much of Sub‐Saharan Africa is experiencing major changes in farm land ownership patterns. Among all farms below 100 hectares in size, the share of land on small‐scale holdings under five hectares has declined except in Kenya. Medium‐scale farms (defined here as farm holdings between 5 and 100 hectares) account for a rising share of total farmland, especially in the 10–100 hectare range where the number of these farms is growing especially rapidly. Medium‐scale farms control roughly 20% of total farmland in Kenya, 32% in Ghana, 39% in Tanzania, and over 50% in Zambia. The numbers of such farms are also growing very rapidly, except in Kenya. We also conducted detailed life history surveys of medium‐scale farmers in each of these four countries and found that the rapid rise of medium‐scale holdings in most cases reflects increased interest in land by urban‐based professionals or influential rural people. About half of these farmers obtained their land later in life, financed by nonfarm income. The rise of medium‐scale farms is affecting the region in diverse ways that are difficult to generalize. Many such farms are a source of dynamism, technical change, and commercialization of African agriculture. However, medium‐scale land acquisitions may exacerbate land scarcity in rural areas and constrain the rate of growth in the number of small‐scale farm holdings. Medium‐scale farmers tend to dominate farm lobby groups and influence agricultural policies and public expenditures to agriculture in their favor. Nationally representative Demographic and Health Survey (DHS) data from six countries (Ghana, Kenya, Malawi, Rwanda, Tanzania, and Zambia) show that urban households own 5–35% of total agricultural land and that this share is rising in all countries where DHS surveys were repeated. This suggests a new and hitherto unrecognized channel by which medium‐scale farmers may be altering the strength and location of agricultural growth and employment multipliers between rural and urban areas. Given current trends, medium‐scale farms are likely to soon become the dominant scale of farming in many African countries.     

How do informal farmland rental markets affect smallholders’ well‐being? Evidence from a matched tenant–landlord survey in Malawi

We estimate the efficiency and equity returns to farmland rental markets in Malawi using a matched tenant–landlord survey of smallholder farm households in four districts. Our sample allows us to more fully observe the landlord side of the rental market, which is almost always missing in previous studies. Our results suggest that land rental markets promote efficiency by facilitating a net transfer of land to more productive farmers. We also find that land rental markets promote equity as conventionally defined in the land markets literature, that is, by transferring land from land‐rich households to land‐poor households, and from labor‐poor to labor‐rich households. However, our study identifies some important challenges for land rental markets in this context. First, we find that tenants in our sample are wealthier than their landlord counterpart on average in all dimensions other than landholding. In addition, most landlords report the motive for renting out their land as either the need for immediate cash, or the lack of labor and/or capital to cultivate the plot that was rented out. These findings align with concerns about potential “stress renting” by poor landlords and suggest the value of defining equity along a broader set of dimensions other than simply equalizing the distribution of farmland and labor.     

Introduction to the special issue on the role of nonfarm income in poverty reduction: evidence from Asia and East Africa

In this special issue, we present seven studies that collectively attempt to investigate the role of non‐farm income in long‐term and short‐term poverty reduction in Asia and Africa. The first four studies out of the seven use long‐term panel data over two decades in the Philippines, Thailand, Bangladesh, and India. These studies show drastic increases in non‐farm income shares and corresponding declines in poverty levels over time, especially in the Philippines and Thailand. Education levels of household members and returns to education also increased significantly in these countries. The remaining three studies use cross‐sectional and short‐term panel data from Ethiopia, Kenya, and Uganda. These African studies show high proportions of poor households and low shares of non‐farm income that are somewhat comparable to the situation in the 1980s described in the Asian studies. Without the Green Revolution that provided stable farm income and potential financial resources to invest in children' education in Asia, it is not clear if African farm households can follow the Asian examples.     

Is there a future for small farms in developed countries? Evidence from the French case

This research aims to identify the specific characteristics of small farms in developed countries and the factors that influence their survival and growth. Using the case of France, we employ statistical and econometric analysis of data from the Farm Structure Survey (N = 70,000) for the period 2000–2007. The principal findings suggest that small farms are no more likely than other farms to employ “alternative” strategies to the predominant model of increasing farm size, nor are they more likely to diversify on‐farm activities or operate under quality‐labeled production systems, with the notable exception of organic agriculture. However, where small farms do adopt or practice these activities, they are seen to have a favorable effect in ensuring their survival and growth. In contrast, we are unable to conclude that pluriactivity of farm households has a positive impact on the survival of small enterprises. The effect of geographical location on small farms is largely expressed in their concentration in mountainous or disadvantaged regions. Overall, the trajectory of small farms is marked by farm exit, principally as the result of farmers retiring at the end of their careers. The small farm sector is also revitalized by both larger farms declining and thus being reclassified as small farms, as well as the progressive entry into agriculture of small farm holders whose income was previously derived largely off‐farm.     

Rising Food Prices and Household Welfare: Evidence from Brazil in 2008

Food price inflation in Brazil in the 12 months to June 2008 was 18%, whereas overall inflation was 7%. Using spatially disaggregated monthly data on consumer prices and two different household surveys, we estimate the welfare consequences of these food price increases, and their distribution across households. Because Brazil is a large food producer, with a predominantly wage‐earning agricultural labour force, our estimates include general equilibrium effects on market and transfer incomes, as well as the standard estimates of changes in consumer surplus. Although the expenditure (or consumer surplus) effects were large, negative and markedly regressive everywhere, estimates of the market‐income effect were positive and progressive, particularly in rural areas. Because of this effect on the rural poor, and of the partial protection afforded by increases in two large social assistance benefits, the overall impact of higher food prices in Brazil was U‐shaped, with middle‐income groups suffering larger proportional losses than the very poor. Nevertheless, as Brazil is 80% urban, higher food prices still led to a greater incidence and depth of poverty at the national level.     

Off‐Farm Work,Intensity of Government Payments,and Farm Exits: Evidence from a National Survey in the United States

The last three decades have witnessed the continued exit of households from primary agriculture in the United States, where the average annual gross exit rate has averaged 10% per year. Understanding exit behavior is one key to future farm structure, management of abandoned land, depopulation of rural areas, and agricultural policy, including government program payments. This study empirically estimates the determinants of exit decisions of farm households. Particular attention is given to the roles of intensity of government payments and off‐farm work decisions of farm couples in the exit decision. Using a large farm‐level survey and controlling for endogeneity, results indicate that farm households with reduced intensity of government payments are more likely to exit farming. Households where the operator spouse works off the farm are more likely to exit farming. Additionally, households with older farmers, with the farm operator and spouse raised on a farm, and households operating farms located in Northern Great Plains are more likely to exit farming.