Off-farm Activities by Agricultural Households in Nicaragua: Exploiting Comparative Advantages or Fighting Agricultural Problems?

Abstract

This paper considers off-farm labour activities by agricultural households in Nicaragua. It compares the role of: i) comparative advantages of households and individuals; and ii) agricultural conditions and market imperfections, in shaping off-farm labour supply. An econometric specification is developed which allows for random household-specific effects and easy estimation. Results reveal that non-agricultural off-farm work is largely determined by comparative advantages, whereas agricultural off-farm work is used extensively to deal with a number of agricultural conditions and market imperfections.