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Public Transfers and Subsistence Producer Disincentives in Botswana

Author

Listed:
  • Tebogo B. Seleka
  • Khaufelo R. Lekobane

    (Botswana Institute for Development Policy Analysis)

Abstract

This paper investigates the disincentive effects of public transfers on subsistence producers in Botswana. Comparative statics analyses indicate that public transfers would not affect farm production when profit and utility maximization decisions are recursive, with the profit maximization decision made first. However, when such decisions are interdependent, public transfers would lead to a reduction in farm output. Empirical results reveal that social pensions have impacted positively on cultivated area, but have had no impact on cereal yields and output. However, government food rations have impacted adversely on cultivated area, yields and output; they are a disincentive to crop production because they are relatively more sizable, consistent and certain. This, it is argued, is because food packages are directly substitutable for subsistence crop production. Therefore, public policy in Botswana should consider moving away from food to cash transfers to minimize such disincentive effects.

Suggested Citation

  • Tebogo B. Seleka & Khaufelo R. Lekobane, 2014. "Public Transfers and Subsistence Producer Disincentives in Botswana," Working Papers 37, Botswana Institute for Development Policy Analysis.
    • Handle: RePEc:bid:wpaper:37
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    File URL: http://knowledge.bidpa.bw:8080/xmlui/handle/123456789/103
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    Citations

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    Cited by:

    1. Khaufelo Raymond Lekobane & Keneilwe S Mooketsane, 2016. "Rural Poverty in Botswana: A Gendered Analysis," Journal of Social and Development Sciences, AMH International, vol. 7(1), pages 48-58.
    2. Tshepiso Gaetsewe, 2020. "Characteristics of Firms in Botswana's Informal Economy," Working Papers 74, Botswana Institute for Development Policy Analysis.
    3. Tebogo B. Seleka & Khaufelo R. Lekobane, 2017. "Public Transfers and Participation Decisions in Botswana's Subsistence Economy," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1380-1400, November.
    4. Tebogo B. Seleka, 2022. "Old wine in a new bottle? Impact of the ISPAAD input subsidy program on the subsistence economy in Botswana," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 298-322, February.
    5. Tebogo B. Seleka, 2020. "Targetting Effectiveness of Social Transfer Programs in Botswana:Means-tested versus Categorical and Self-selected instruments," Working Papers 72, Botswana Institute for Development Policy Analysis.

    More about this item

    Keywords

    Botswana; Public transfers; Safety nets; Subsistence agriculture; Welfare dependency; Work disincentives.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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