Nonfarm enterprise participation and healthcare expenditure among farm households in rural Ghana

Purpose - Rural poverty remains high in many developing countries, Ghana inclusive. This has implications for healthcare affordability and utilization, and thus the attainment of universal health coverage. Nonfarm diversification is seen as a means by which rural farm households can increase incomes and smooth consumption including healthcare. The purpose of this paper is to investigate the impact of nonfarm enterprise participation on healthcare expenditure among farm households in rural Ghana. Design/methodology/approach - Using nationally representative household data from the sixth round of the Ghana Living Standards Survey (GLSS 6), the paper employs endogenous switching regression and propensity score matching techniques to account for potential selectivity bias. Findings - Results indicate that households that participate in nonfarm enterprises earn higher incomes and expend more on healthcare. Total household income and region of residence are significant determinants of healthcare expenditure among farm households in rural Ghana. In addition, while in nonfarm enterprise nonparticipating households the marital status of the head of household is important, for participating households the head having at least secondary education significantly influences healthcare expenditure. Practical implications - Promoting nonfarm activities and hence raising the incomes of households in rural areas of Ghana has the potential of increasing health capital through increased investments in health. It will also positively impact access to and utilization of healthcare and ultimately contribute towards increased farm and non-farm productivity. Originality/value - Previous studies have only examined the determinants of nonfarm enterprise participation or its impact on household welfare, poverty, inequality, food security and agricultural investments. While evidence abounds on the positive impact of rural nonfarm enterprise participation on household income, which in turn has implications for household health expenditure, the potential positive link between rural nonfarm enterprise participation and household healthcare expenditure remains unexamined.