The Determinants of off-Farm Employment and its Role in Rural Poverty Alleviation: Thecase of Oromia Regional State
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Date
2011-06
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A.A.U
Abstract
This study is motivated to find explanation that agricultural sector alone cannot ensure sufficient
employment or sufficient income for the rural population. It attempts to suggest the need for
integrating agriculture with off-farm sector so that they reinforce each other's growth and
contribute to poverty alleviation.
The specific objectives of the study are to investigate factors influencing the probability
of involvement in off-farm employment at household level, and to measure the impact of
off-farm employment on rural poverty alleviation.
A survey data collected by the Ministry of Social and Labor Affairs on off-farm
employment (wage and self-employed non-farm activities) in 1996 is used for analysis.
Farm household model is constructed to see how the farmers in the region allocate their
time endowment for farm work, off-farm work and leisure. Moreover, a log it regression
model is fitted to measure the effect of the determinants of the probability of off- farm
employment. The factors are broadly divided into household ,farm, financial and location
characteristics.
Among the household characteristics, the household size and religion (Orthodox
Christianity as against other religions) are found to influence positively the involvement
of household members in off-farm economy. To the contrary, marital status (married
households against non-married households) and employment status (own account work
against others) are found to influence negatively the probability of participation in off farm
sector.
Farm characteristics such as size of cultivated land for cereal crops, coffee and chat
production, fertilizer use and number of cattle, have negative effect on the probability of
engagement in off-farm sector. This implies that better off farmers with the above farm
resources are less likely to participate in off-farm employment as compared to farm
resource- poor households. Hiring in causal labor is positively related with the
probability of off-farm work.
Credit recipients are found to participate more likely in off-farm activities than non recipient
households. This dictates the need to expand credit facilities to rural
households to enable them diversify sources of their employment or income and hence
escape poverty.
Relative poverty is measured with the help of FGT (Foster -Greer-Thor beck) model
based on the annual income of 1668 sample households. The measurement result shows
that poverty is severe in rural Oromia. Nearly 65% of the sample households found to be
poor. Nevertheless, poverty measures vary across employment categories, namely farm,
off-farm and dual employment.
The results of the study suggest that the determinants of off-farm employment need to be
addressed in view of integrating off-farm employment with fann employment. More over,
narrowing the livelihoods gap between the rural households need to be the major focus of
the Regional Government's development agenda.
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Keywords
Determinants of Off-Farm Employment, Oromia Regional State