Fishing and Non-Fishing Income Decisions: The Role of Human Capital and Family Structure

Abstract

Resource-dependent households often seek to diversify their income sources, and the labor-leisure tradeoff in such cases has been widely studied. We complement and extend this literature in three ways. First, we allow remittances – the demand for financial assistance from working-age children – to be endogenous and jointly determined with household labor allocation. We develop a model to delineate the income diversification tradeoffs posed for resource-dependent households. Second, we extend the off-farm labor supply literature to the case of a rural fishery, an application that has not received much attention in the literature and yet affects household welfare on a global scale. Third, we provide empirical evidence of the interdependence between educational attainment and family structure in determining income diversification opportunities. Using a unique survey dataset from Malaysia, we show that income diversification is non-monotonic in educational attainment. We find that the income diversification choices of more educated fishermen depend on their family composition; those with a larger number of school-age children are more likely to seek non-fishing labor income to supplement fishing earnings, whereas those with a larger number of out-migrated adult children are more likely to receive remittances. Among uneducated fishermen, however, those with larger families in general are less likely to diversify. Policy implications for conservation and development of alternative livelihoods are discussed.