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How Costly is it for Poor Farmers to Lift Themselves out of Subsistence?

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  • Cadot, Olivier
  • Olarreaga, Marcelo
  • Dutoit, Laure

Abstract

The main objective of this paper is to provide estimates of the cost of moving out of subsistence for Madagascar's farmers. The analysis is based on a simple asset-return model of occupational choice. Estimates suggest that the entry (sunk) cost associated with moving out of subsistence can be quite large somewhere between 124 and 153 percent of a subsistence farmer's annual production. Our results make it possible to identify farm characteristics likely to generate large gains if moved out of subsistence, yielding useful information for the targeting of trade-adjustment assistance programs.

Suggested Citation

  • Cadot, Olivier & Olarreaga, Marcelo & Dutoit, Laure, 2005. "How Costly is it for Poor Farmers to Lift Themselves out of Subsistence?," CEPR Discussion Papers 5392, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5392
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    3. Grigoriou, Christopher, 2007. "Landlockedness, infrastructure and trade : new estimates for central Asian countries," Policy Research Working Paper Series 4335, The World Bank.
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    6. Tigist Mekonnen Melesse, 2015. "Agricultural Technology Adoption and Market Participation under Learning Externality: Impact Evaluation on Small-scale Agriculture from Rural Ethiopia," Working Papers 2015/06, Maastricht School of Management.
    7. Mekonnen, Tigist, 2017. "Impact of agricultural technology adoption on market participation in the rural social network system," MERIT Working Papers 2017-008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Threshold regression; Switching regression; Unknown sample separation; Madagascar; Subsistence; Entry costs;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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