Land rental markets and labor productivity: Evidence from rural China

This study investigates the impact of the land rental market on labor productivity in rural China. Particular attention is given to farm and nonfarm labor productivity. Using 2012 household‐level data and a multinomial endogenous switching treatment regression technique, we find that rural households renting in farmland increased labor productivity in the farm sector by about 55%, whereas labor productivity in the nonfarm sector decreased by about 6%. We also find that rural households renting out farmland had lower labor productivity in both the farm and nonfarm sectors by 13% and 9%, respectively. More family labor transferred from the farm to the nonfarm sector after renting out land.     

Income distribution in rice–growing villages during the post-Green Revolution periods: the Philippine case, 1985 and 1998

This paper aims to examine changes in household income sources and its impact on household income distribution in the post‐Green Revolution periods in 1985 and 1998 in the rural Philippines. We found that there has been a structural shift of household income away from farm in favor of nonfarm labor income sources. This finding indicates that rural development is being led by nonfarm sectors. Such a shift has resulted in an increase in household income inequality as the distribution of nonfarm income has become less equal over time and was markedly more unequal than that of farm income in 1998.     

Does human capital raise farm or nonfarm earning more? New insight from a rural Pakistan household panel

This study explores how human capital affects farm household earnings using two tools to refine measurement of human capital effects. First, it employs a two‐sector model to allow the allocation of family labor between farm and nonfarm activities. Second, it accounts for village fixed effects to evaluate whether results from panel data differ meaningfully from a cross‐sectional data analysis with local binary variables. The results show that education has a negligible effect on farm earnings; instead, experience appears to be the principal channel by which human capital affects agricultural performance in a traditional rural setting. Our results also suggest that prior models that fail to separate nonfarm activities spuriously exaggerated the effect of education to the farm sector. In addition, typical cross‐sectional analyses that ignore fixed effects may cause the effects of education on rural household earnings to be significantly overstated. The fact that panel data regressions accounting for village‐level fixed effects found only one instance of education raising earnings—the effect of literacy on nonfarm income—suggests that considerable heterogeneity may have been ignored in cross‐sectional data analyses, especially ones that omitted village‐level effects.     

Intertemporal analysis of employment decisions on agricultural holdings in Slovenia

The article attempts to quantify determinants influencing the dynamics of employment decisions on agricultural holdings in Slovenia and to test specific aspects of labor reallocation during the transition period by the application of an agricultural household model. Through the use of a 1991–2000 longitudinal data set for 22,055 farm households, quantitative analysis of intertemporal employment decisions by farm holders is carried out using probit techniques. The determinants tested relate to the personal characteristics of farm holders (gender, age, education level, and potential off‐farm income), household characteristics (size, structure), characteristics of the agricultural holding (economic size, labor intensity), and local labor market conditions. The model results generally confirm existing empirical evidence on asymmetrical and irreversible participation of holders on the labor market. Despite intensive restructuring of agriculture and profound changes in the nonfarm labor market in the analyzed period, labor supply of farm holders remains rigid. The mobility of labor supply is lower than expected, which can be attributed to the importance of structural problems constraining intersectoral mobility. Low labor mobility reduces the efficiency of labor allocation on agricultural holdings in Slovenia. Elements of this problem emerge on both supply (e.g., low level of educational and professional attainment of reference persons) and demand sides of the labor market (e.g., unfavorable local labor market conditions). A marked tendency toward maintaining the same employment status is more distinct in the case of holders employed on‐farm only.     

How has microcredit supported agriculture? Evidence using panel data from Bangladesh

Improving agricultural productivity has received a greater attention in recent years amid concerns about rising food insecurity, population pressures, and climate change. Many believe that better access to institutional credit, spanning microcredit as well as commercial and agricultural banks, can help rural households smooth risks, and access inputs and other technology to modernize agriculture and improve farm/nonfarm linkages. We use recently augmented household panel data spanning over 20 years in Bangladesh to examine the effects of rural credit expansion (both microcredit and formal bank channels) on outcomes for agricultural households. We find that microcredit has benefited households with lower landownings, raising agricultural income from activities such as livestock rearing that require less land, as well as nonfarm income diversification for all households, but with the strongest effect for landless or near‐landless households. We do not find effects of microcredit on crop income, but do, however, find that reported supply‐side credit constraints significantly lower crop income. Borrowing by both men and women has contributed to nonfarm income growth for marginal farmers, but only men's borrowing has contributed to nonfarm income growth among higher landowning groups.     

Rural nonfarm activities and agricultural crop production in Nigeria

Although most rural households are involved in the farm sector, the nonfarm sector has grown significantly in recent decades, and its role in rural development has become increasingly important. This article examines the effect of participation in nonfarm activities on crop expenses of farm households in Nigeria. The relationship is modeled using a nonseparable agricultural household model that suggests that participating in nonfarm activities can relax the credit constraints facing farm households and reduce risk thereby helping households improve farm production and smooth consumption over time. The results show that participation in nonfarm activities by Nigerian farmers has a positive and significant effect on crop expenses and in particular on payments for hired labor and inorganic fertilizers. Separate analysis of the six geopolitical zones in Nigeria indicates that it is in the South-South and South-East zones where nonfarm participation appears to induce more hiring of labor. The results support the hypothesis that nonfarm participation helps relax liquidity constraints but suggests how that liquidity is used is zone-specific. In general, the results also indicate that liquidity is used more to pay for inputs into staple production as opposed to cash crops.     

Market imperfections,liquidity, and farm household labor allocation: the case of rural South Africa

Asset endowments and market imperfections shape households’ labor allocation decisions and lead to different production regimes within rural farm households in South Africa. This article uses a farm household model to explain the presence of three main household groups determined on the basis of the labor regime adopted: small peasants (working both on and off farm), self‐cultivators (autarkic in labor) and hiring‐in households. A partial generalized ordered logit is used to test the main predictions of the model and a Brant test on threshold constancy is performed to identify the household‐specific factors affecting labor market participation. The results show that liquidity constraints and market imperfections matter in the choice of the labor strategy adopted. Liquidity‐constrained households are more likely to sell labor off farm while access to information facilitates the hiring in of workers.     

Examining rural income and employment in Bangladesh: A case of structural changes in the rural nonfarm sector in a developing country

This study uncovers some important stylised facts about the structural changes in the rural nonfarm (RNF) economy in Bangladesh for the period 2000–2016 and identifies some broad determinants. Our work uses household-level, secondary sources such as Household Income and Expenditure Survey, Labour Force Survey and Bangladesh Integrated Household Survey. We find that the positive relationship between landownership and rural income has become weaker in recent years, indicating the increasing role of nonland inputs in generating rural income. The share of RNF income in total rural income has increased substantially over the years. The increase in nonfarm income is largely driven by the nonfarm wage income of the richer households, indicating adverse distributional consequences. There are also indications for specialisation in nonfarm activities—the share of income from the ‘mixed’ sources of farm and nonfarm has decreased, and the ‘only nonfarm’ source has increased. Households tend to move away from agriculture and specialise in RNF occupations as the education level increases. Our results offer important insights into rural development strategies and contribute to the broader questions of the development discourse on the structural changes in developing countries.     

The effects of China's Sloping Land Conversion Program on agricultural households

In the late 1990s, China aimed to mitigate environmental degradation from agricultural production activities by introducing the world's largest “Payments for Environmental Services? program: the Sloping Land Conversion Program (SLCP). We develop a microeconomic Agricultural Household Model, which can model the production, consumption, and nonfarm labor supply decisions of agricultural households in rural China in a theoretically consistent fashion. Based on this theoretical model, we derive an empirical specification, which we econometrically estimate using the Hausman–Taylor method and a large longitudinal farm household data set. The empirical results significantly differ between regions, but are generally consistent with the results of our theoretical comparative static analysis, for example, that the SLCP significantly decreases agricultural production. While the SLCP only increases nonfarm labor supply and total consumption in some regions, these effects could not be observed in others. The recent reduction of the SLCP compensation payment rates generally had negligible effects on agricultural production and off‐farm work and only very small effects on household consumption.     

Consumption inequality between farm and nonfarm households in Taiwan: a decomposition analysis of differences in distribution

Consumption has been recognized as a more reliable indicator of household well‐being than income. Although a considerable body of literature has examined income inequality between farm and nonfarm households, little is known about inequality in consumption. This research aims to fill this knowledge gap by investigating consumption disparity between farm and nonfarm households. Using a nationally representative household survey from Taiwan, we apply an unconditional quantile regression‐based decomposition method to decompose the differences in the distribution of household expenditure between these farm and nonfarm households. The results indicate that differences in the observed characteristics between these two types of households explain most of the consumption inequality. Moreover, the difference in the education level of the farm operator, household income, and the degree of urbanization are particularly important.     

The increasing importance of nonfarm income and the changing use of labor and capital in rice farming: the case of Central Luzon, 1979–2003

There have been sharp increases in nonfarm income among farm households in Central Luzon for the last few decades. This study attempts to identify the effects of the increasing nonfarm income on the use of tractors and threshers and on the employment of hired labor as a substitute for family labor. We found that while the increased nonfarm income positively affects the ownership of tractors, it has no significant impact on the use of agricultural machines due presumably to the development of efficient machine rental markets. We also found that the increased nonfarm income leads to the increased use of hired labor, thereby releasing family labor to nonfarm jobs.     

Nonf arm Labor Market Participation of Farm Women

Structural changes in Saskatchewan agriculture have led to significant changes in the time allocation of labor of farm women. This paper analyzes the nonfarm labor market participation and labor supply of farm women in the theoretical context of a household production function and contrasts them with those of men. Participation is analyzed using probit models, and nonfarm labor supply functions are estimated using tobit models. Personal characteristics such as age, education, number of children and nonfarm labor participation of the spouse are significantly related to the nonfarm labor market participation and labor supply of farm women, and the direction of influence is as expected. Farm characteristics such as farm size and type are significant in the case of males but not for females. Labor market characteristics are represented only by distance to the nearest center of Complete Shopping Center status or higher and, while this variable is negatively significant for males as expected, it is not significant for females Les changements structurels qui on frappé l'agriculture de la Saskatchewan ont entraîné des modifications significatives à la répartition du temps des agricultrices en matière de travail. L'article présente une analyse de la participation au marché du travail non agricole, ainsi que de l'offre de main-d'oeuvre des agricultrices, dans le contexte théorique d'une fonction de production de ménage, en comparaison avec la situation observée chez les hommes. Le degré de participation e'tait analysé à partir de modèles probit et les fonctions d'offre de main-d'oeuvre non agricole étaient estimées à partir de modéles tobit. Les caractères personnels comme l'âge, I'instruction, le nombre d'enfants et la participation du conjoint à un travail non agricole étaient significativement reliés, dans le sens attendu, à la participation des femmes au marché du travail non agricole et au temps qu'elles pouvaient y consacrer. Les caractères de l'exploitation, superficie et type, n'étaient significatifs que pour les hommes mais pas pour les femmes. Le seul caractére du marché de main-d'oeuvre considéré était la distance entre la ferme et l'agglomération la plus proche de niveau de centre commercial complet ou de niveau supérieur. Bien que, comme on pouvait s'y attendre, cette variable était significativement négative dans le cas des hommes, elle n'avait pas de valeur significative pour les femmes     

Farm households and nonfarm activities in Ethiopia: does clustering influence entry and exit?

This article examines how clustering affects the entry and exit decisions of farm households into and from nonfarm enterprises in rural Ethiopia. We find that the existence of clusters of microenterprises in the same district increases the likelihood of a rural household to start a nonfarm enterprise. Similarly, clustering of big manufacturing firms in the same zone is found to increase the likelihood of farm households to start a nonfarm enterprise. Nonfarm enterprises operating in clusters are also found to have a lower probability of exit than those operating outside of clusters. The study further investigates the impact of entry and exit into and from nonfarm enterprises on farm household's well‐being using as indicators total household income, the food security status of a household, and the household's ability to raise enough money in case of emergency. Using propensity score matching to account for selection bias, we find that entry into nonfarm enterprises significantly increases household's income and food security status. Exit from nonfarm enterprises, on the other hand, is found to significantly reduce household's income.     

Linkages between the farm and nonfarm sectors at the household level in rural Ghana: a consistent stochastic distance function approach

This article explores the effects within households of an expanding rural nonfarm (RNF) sector in Ghana. We ask whether the growing RNF sector allows for economies of diversification within farms, how it affects household input demands, and whether it has measurable effects in overall household production efficiency. We explore the intrahousehold linkages between agricultural and RNF activities, first assuming perfectly competitive input and output markets and then with market failures, in particular missing labor and credit markets. We then measure these linkages using a household level input distance function, finding high levels of inefficiency in Ghanaian farms. Also, there are cost-complementarities between the RNF sector and the agricultural sector, particularly with food crops in which the poorest tend to specialize. The expansion of the RNF sector increases demand for most inputs including agricultural land. Finally, we show that smaller farms tend to be more efficient, and that RNF output is helping the farm household to become more efficient, but the latter result is not robust.     

Nonfarm employment,agricultural intensification,and productivity change: empirical findings from Uganda

This article uses panel data from the Living Standards Measurement Study‐Integrated Surveys on Agriculture for Uganda to assess the farm‐level effects of nonfarm employment on agricultural intensification and productivity change. A sample selection model is used to account for both unobserved heterogeneity and potential simultaneity between agricultural production and nonfarm income. Results show that nonfarm employment can have differential impacts on farm technology intensity and productivity. Nonfarm income is found to have a positive impact on farm hired labor and improved seed intensity; a negative effect on on‐farm family labor use; and no significant impact on fertilizer, soil water management, and joint use of farm technologies. The econometric evidence also indicates that agricultural productivity declines as nonfarm income increases. Taken together, our findings reveal important trade‐offs between nonfarm employment and income and farm productivity growth under smallholder agriculture. The results indicated that targeted policies are required to reduce these potential trade‐offs between nonfarm employment and agricultural intensification and productivity change.     

US agricultural exports and labor market adjustments

This study empirically investigates the impact of US agricultural exports on farm and nonfarm employment and tests how individuals adjust to agricultural export shocks. Based on the data from 1991 to 2017 and a Bartik-style instrument that exploits cross-regional variation in agricultural export exposure stemming from initial differences in agricultural specialization and temporal variation in predicted US exports from exogenous tariff reductions, we find that a 1% increase in agricultural exports increases farm employment by 0.302% and has no statistically significant impact on nonfarm employment. The individual-level analysis shows that, in response to positive agricultural export demand shocks, natives with a college degree are more likely to become self-employed and start farm activities and while non-natives without a college degree are more likely to become hired farmworkers. A back-of-the-envelope calculation based on the estimates of agricultural trade elasticities of employment shows that on balance, job gains due to US agricultural exports are slightly larger than job loss due to agricultural imports, resulting in a net gain of around 0.24 million farm jobs over 1991–2017.     

Stability of Farm Income and the Role of Nonfarm Income in U.S. Agriculture

This study measures the variability in real net farm income in the U.S. agricultural sector and per farm and determines if variability has diminished over 1933 to 1999. Second, the role of nonfarm income in reducing the variability in total farm household income is examined. Results indicate that the variability in real net farm income in the sector and at the farm level has not diminished and that nonfarm income has helped to reduce the variability in total farm household income.     

Income Diversification of Rural Households in China

This article examines how different patterns of farm‐level diversification affect the income levels of rural households in China. Using quantile regression analysis of data from a rural household survey, the empirical results exhibit significant differences in diversification effects across rural income strata and various structural characteristics. Diversification, especially involving nonfarm employment and migration, brings a monetary premium to low‐income rural families and an income discount to high‐income families. The policy implications suggest the encouragement of labor‐intensive enterprises in rural areas and improvement of labor quality through rural education and training programs.     

Enhancing food security through diet quality: The role of nonfarm work in rural India

India has achieved food security at the macro level. However, at the micro level, the country still struggles with extensive problems of food nutrition insecurity. In this paper, we assess the impact of nonfarm income and nonfarm work status (casual and full-time nonfarm work) of operator, spouses, and couples on the diet quality of smallholder households in India. We find that nonfarm income decreases the likelihood of farming household being in the poor-diet quality group by 31% and the medium-diet quality group by 3%. Full-time nonfarm work by operators and spouses decreases the likelihood of farming households being in the poor-diet quality group by 3% and 9%, respectively. Finally, national programs like public food distribution programs increase the probability of rural farming households in the poor-diet quality group. Findings from this study underscore the importance of nonfarm income and full-time nonfarm work in improving diet quality of rural Indian households.     

Participation and returns in rural nonfarm activities: evidence from the Kyrgyz Republic

This article uses two representative household budget surveys from the Kyrgyz Republic to analyze factors influencing participation and returns from different types of nonfarm activities in 2005 and 2006. We use the double hurdle and Heckman models, which allow us to demonstrate that a number of variables has different effects on participation and income from nonfarm activities. For example, residing in remote areas and lack of capital are found to stimulate participation in nonfarm activities, but decrease nonfarm income. Results are robust, but using the Heckman model seems to produce more accurate results for returns to education and gender under the presence of selection bias. Overall, nonfarm activities are found to be most important for the poor, who are pushed out of agriculture due to limited and poor land resources. This indicates that equipping poor households to enable them to move towards better remunerative nonfarm activities should be a priority for Kyrgyz rural policy makers.