Effect of off-farm work on agricultural productivity: empirical evidence from northern Ghana

Abstract

Abstract. In recent years, there has been increasing recognition of the importance of income diversification to agrarian households in developing countries. Empirical evidence of the effect of farm household income diversification on agricultural productivity remains scanty and inconclusive. An important policy question concerns the effect that farmer participation in off-farm work has on agricultural productivity. This paper answers that question by examining the factors that explain the decision of farm household heads to work off-farm and how this impacts farm productivity using a sample of 300 rice producing households in northern Ghana. Endogenous switching regression model supported by a treatment effect model was used to empirically assess the effect of off-farm work on agricultural productivity. Results show that engagement in off-farm work has a robust and positive impact on rice productivity. Farmers’ choice to work outside the farm thus contributed significantly to rice productivity of smallholders, confirming the role of income diversification in contributing to agricultural productivity of agrarian households.