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Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe

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  • Cornilius Chikwama

Abstract

This study examines the widely held view that rural off-farm income, in particular that earned from rural wage employment, may assist households in overcoming credit constraints when making farm investments. The analytical results of the study show that rural wage employment income can only assist in raising farm investment if it can be saved at positive rates and households face high-unemployment, i.e., they have idle labour. When there is no unemployment in the household or when unemployment is very low, increased availability of rural wage employment will in fact lead to "de-agrarianisation". Although the study finds evidence for high-unemployment from a 3-year panel data set of 359 households in 3 Resettlement Schemes in Zimbabwe, it finds no evidence that existing rural wage opportunities contribute towards raising households' farm investment. This is attributed to the fact that the savings rate for rural wage income is not significantly different from zero.

Suggested Citation

  • Cornilius Chikwama, 2004. "Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe," CERT Discussion Papers 0403, Centre for Economic Reform and Transformation, Heriot Watt University.
    • Handle: RePEc:hwe:certdp:0403
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    References listed on IDEAS

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    Cited by:

    1. Thia Hennessy & Mark O’ Brien, 2007. "Is off-farm income driving on-farm investment?," Working Papers 0704, Rural Economy and Development Programme,Teagasc.
    2. Mathenge, Mary K. & Tschirley, David L., 2008. "Off-Farm Work and Farm Production Decisions: Evidence from Maize-Producing Households in Rural Kenya," Working Papers 202609, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    3. Li Li & Atsushi Tsunekawa & Yangshangyu Zuo & Atsushi Koike, 2019. "Conservation Payments and Technical Efficiency of farm Households Participating in the Grain for Green Program on the Loess Plateau of China," Sustainability, MDPI, vol. 11(16), pages 1-16, August.
    4. S Subramanian, 2018. "Participation of rural households in farm, non-farm and pluri-activity: Evidences from India," Working Papers 412, Institute for Social and Economic Change, Bangalore.
    5. Smale, Melinda & Mathenge, Mary K. & Opiyo, Joseph, 2015. "Nonfarm Work and Fertilizer Use Among Smallholder Farmers in Kenya: A Cross-Crop Comparison," Working Papers 206441, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    6. Ma, Wanglin & Renwick, Alan & Grafton, Quentin, 2018. "Farm machinery use, off-farm employment and farm performance in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(2), April.

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    More about this item

    Keywords

    off-farm income; rural wage employment; farm capital; agricultural development;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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