Farm Households Labor Supply to off Farm Activities in Ethiopia
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Date
2002-06
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Addis Ababa University
Abstract
Farm households in Ethiopia are participating in off farm activities to supplement
their farm income. Despite the importance of off farm income to the farmers less
attention was given to the sector. There is also little empirical evidence on the off
farm labor supply behavior of farm households in Ethiopia.
Understanding the factors that affect the off farm work decisions is very important for
rural development in general and farmers in particular. Therefore this paper tries to
see the off farm participation decision and labor supply behavior of farm households
in Ethiopia. It uses the 1999 Ethiopian rural household survey conducted by the
department of economics of Addis Ababa University in collaboration with the US AID.
The bivariate probit and Tobit models are used to analyze the data.
The results of the study indicated that various individual and farm characteristics
affect the off farm work participation and labor supply decisions of farmers. Of the
human capital variables, education of the household head does not affect the off farm
work decisions of farmers. It increases the return on the farm. But average schooling
of the family positively affects the off farm labor supply of males. The off farm wage
rate is significantly affected by the level of schooling of the household members and
is more important for female members than males. The other human capital variables
included in the study, farm experience, handicraft training, and health status of the
family are important factors that affect the off farm work decisions of farm
households. The availability of financial sources has a significant impact on farmers’
decision to engage in the sector. The negative effect with land size shows that poor
and landless households will be benefited from the sector
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Economic Policy Analysis