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Synopsis: Non-farm income and labor markets in rural Ethiopia

Author

Listed:
  • Bachewe, Fantu Nisrane
  • Berhane, Guush
  • Minten, Bart
  • Taffesse, Alemayehu Seyoum

Abstract

Ethiopia’s economy is rapidly transforming. However, the extent to which this is affecting off-farm income and labor markets in rural areas is not well understood. Based on a large-scale household survey in high potential agricultural areas of the country, we find that total off-farm income (defined as wage and enterprise income) makes up 18 percent of total rural income. Wage income in both the agricultural and non-agricultural sectors accounts for 10 percent of total household income, equating in importance to livestock income. We show off-farm income and wage income to be relatively more important for the poor and for female and youth-headed households. We further find that real rural wages increased by 54 percent over the last decade, mostly driven by high agricultural growth. While this wage increase is good news for the poor, it also induces adjustments in agricultural production practices, including increased adoption of labor-substituting technologies, such as herbicides.

Suggested Citation

  • Bachewe, Fantu Nisrane & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu Seyoum, 2016. "Synopsis: Non-farm income and labor markets in rural Ethiopia," ESSP research notes 61, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:essprn:61
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    Cited by:

    1. Vandercasteelen, Joachim & Beyene, Seneshaw Tamru & Minten, Bart & Swinnen, Johan, 2018. "Cities and agricultural transformation in Africa: Evidence from Ethiopia," World Development, Elsevier, vol. 105(C), pages 383-399.
    2. Dillon, Brian & Brummund, Peter & Mwabu, Germano, 2019. "Asymmetric non-separation and rural labor markets," Journal of Development Economics, Elsevier, vol. 139(C), pages 78-96.
    3. Tekalign Gutu Sakketa & Nicolas Gerber, 2020. "Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data," Research in Labor Economics, in: Change at Home, in the Labor Market, and On the Job, volume 48, pages 61-105, Emerald Group Publishing Limited.
    4. Kopper, Sarah A., 2018. "Agricultural labor markets and fertilizer demand: Intensification is not a single factor problem for non-separable households," 2018 Annual Meeting, August 5-7, Washington, D.C. 274184, Agricultural and Applied Economics Association.
    5. Andinet Woldemichael & Margaret Joldowski & Abebe Shimeles, 2019. "Working Paper 330 - Labor Market Flexibility and Jobs in Selected African Countries," Working Paper Series 2456, African Development Bank.

    More about this item

    Keywords

    ETHIOPIA; EAST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; labour market; labor; rural areas; income; wages; economic development; off farm employment; livestock; households; productivity;
    All these keywords.

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