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Non-farm income and labor markets in rural Ethiopia

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  • 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, 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 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 and mechanization. However, it also relaxes liquidity constraints in the off-season for some households, consequently leading to higher productivity.

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  • Bachewe, Fantu Nisrane & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu Seyoum, 2016. "Non-farm income and labor markets in rural Ethiopia," ESSP working papers 90, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:esspwp:90
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    Cited by:

    1. 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.
    2. Berhane, Guush & Dereje, Mekdim & Minten, Bart & Tamru, Seneshaw, 2020. "The rapid-but from a low base-uptake of agricultural mechanization in Ethiopia: Patterns, implications, and challenges," IFPRI book chapters, in: An evolving paradigm of agricultural mechanization development: How much can Africa learn from Asia?, chapter 10, pages 329-375, International Food Policy Research Institute (IFPRI).
    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. Schmidt, Emily & Woldeyes, Firew Bekele, 2019. "Rural youth and employment in Ethiopia," IFPRI book chapters, in: Youth and jobs in rural Africa: Beyond stylized facts, chapter 5, pages yj109-136, International Food Policy Research Institute (IFPRI).
    5. Bachewe, Fantu Nisrane & Yimer, Feiruz & Minten, Bart, 2017. "Agricultural price evolution in drought versus non-drought affected areas in Ethiopia: An updated assessment using national producer data (January 2014 to January 2017)," ESSP working papers 106, International Food Policy Research Institute (IFPRI).
    6. 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.
    7. Negassa, Asfaw & Bachewe, Fantu Nisrane & Taffesse, Alemayehu Seyoum & Dereje, Mekdim, 2017. "An assessment of the livestock economy in mixed crop-livestock production systems in Ethiopia:," ESSP working papers 101, International Food Policy Research Institute (IFPRI).
    8. 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.
    9. Bachewe, Fantu N. & Berhane, Guush & Minten, Bart & Taffesse, Alemayehu S., 2018. "Agricultural Transformation in Africa? Assessing the Evidence in Ethiopia," World Development, Elsevier, vol. 105(C), pages 286-298.
    10. Bachewe, Fantu Nisrane & Yimer, Feiruz & Minten, Bart & Dorosh, Paul A., 2016. "Agricultural prices during drought in Ethiopia: An assessment using national producer data (January 2014 to January 2016)," ESSP working papers 88, International Food Policy Research Institute (IFPRI).
    11. Takada, Jun & Shuto, Hisato, 2023. "Causal linkages between land reform and factor demand under tenure insecurity: Evidence from Amhara Region, Ethiopia," Land Use Policy, Elsevier, vol. 128(C).
    12. Seneshaw Tamru & Bart Minten & Dawit Alemu & Fantu Bachewe, 2017. "The Rapid Expansion of Herbicide Use in Smallholder Agriculture in Ethiopia: Patterns, Drivers, and Implications," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(3), pages 628-647, July.
    13. Marenya, Paswel P. & Erenstein, Olaf & Prasanna, Boddupalli & Makumbi, Dan & Jumbo, MacDonald & Beyene, Yoseph, 2018. "Maize lethal necrosis disease: Evaluating agronomic and genetic control strategies for Ethiopia and Kenya," Agricultural Systems, Elsevier, vol. 162(C), pages 220-228.
    14. Bachewe, Fantu Nisrane & Minten, Bart & Tadesse, Fanaye & Taffesse, Alemayehu Seyoum, 2018. "The evolving livestock sector in Ethiopia: Growth by heads, not by productivity," ESSP working papers 122, International Food Policy Research Institute (IFPRI).
    15. Williams, T.G. & Guikema, S.D. & Brown, D.G. & Agrawal, A., 2020. "Resilience and equity: Quantifying the distributional effects of resilience-enhancing strategies in a smallholder agricultural system," Agricultural Systems, Elsevier, vol. 182(C).
    16. Bachewe, Fantu Nisrane & Yimer, Feiruz & Minten, Bart, 2016. "Agricultural prices during drought in Ethiopia: An updated assessment using national producer data (January 2014 to June 2016)," ESSP working papers 97, International Food Policy Research Institute (IFPRI).

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    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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