The Impact of Education on Farm and Off-Farm Income in Rural Households of Ethiopia

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Addis Ababa University


This study analyses the impact of education on farm and off- farm income of rural households of Ethiopia. The study is conducted to analyze how education of the household affects the labor allocation and hence the income of the rural households of Ethiopia. Farm household model is constructed to see how farm households allocate their time to farm and off-farm activities. The Seventh round Ethiopian Rural Household Survey data, collected by the School of Economics, Addis Ababa University, in collaboration with other organizations is used for analysis. The labor allocation of the households in to farm and off- farm activities is affected by average education of the household. In addition the household head’s education alone also affects labor allocation of the household. As the households get more education, they reduce labor supply to farm and increase it to off-farm wage employment. The effect of education goes beyond determining labor allocation; it also affects farm and off--farm income. Even though education reduces labor allocation to farm, its overall effect on farm income is positive. This finding suggests that expanding education in rural increases farm income, though it reduces on farm labor supply. Therefore, expansion of education in rural Ethiopia is important to improve farm income and alleviate poverty.



Income in Rural Households of Ethiopia