Abstract

The study investigates the impact of nonfarm income (NFI) on agricultural income and investment using the Pakistan Social and Living Measurement survey data for the year 2005-06. Results show that NFI negatively affects agricultural income and investment whenever it is statistically significant; and these effects are not same across the four provinces of Pakistan. The one to one comparison between the four provinces of the country shows that the effects of NFI on agricultural income and investment differ across provinces. The policy implication is that as compared to other sectors of the economy, agriculture generates low returns and consequently NFI is invested in other more productive sectors of the economy.

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