Off-farm Labor Supply Research Articles

Community-based energy revolution: An evaluation of China's photovoltaic poverty alleviation Program's economic and social benefits

We use a unique micro dataset from the period of 2014–2021 to evaluate China's Photovoltaic Poverty Alleviation (PVPA) program. By employing a difference-in-differences strategy, we find that the community-based PVPA stations distributed in China are anti-poverty facilities that can reconcile equity and efficiency. The PVPA program not only significantly increases the total income of treated households, but also reduces the within-village inequality and encourages off-farm labor supply. Heterogeneity analysis suggests that the effect of PVPA is more substantial for households with a high dependency ratio and in villages where officials are well-educated. The benefit-cost ratio of a village-level PVPA station is greater than one, indicating that the community-based PVPA program is cost-effective.

The Impact of Internet Use on Rural Women’s Off-Farm Work Participation: Empirical Evidence from China

Promoting rural women’s participation in off-farm work is an important way to increase their income and alleviate a shortage of off-farm labor supply. The widespread use of the Internet provides new opportunities to promote their participation in off-farm work. This paper draws on data from the 2020 China Family Panel Studies (CFPS) to analyze the impact of Internet use on rural women’s off-farm work participation by using a logit model and propensity score matching method. The results show that, relative to groups who do not use the Internet, rural women who use the Internet demonstrate an eight-percentage point increase in their participation in off-farm work and a greater enhancement effect on the employed model than the self-employed model. Further analysis reveals that Internet use primarily affects rural women’s participation in off-farm work in four aspects: increasing the efficiency of access to information; increasing human capital; increasing the accumulation of social capital; and changing the perception of gender roles. The heterogeneity analysis finds that when rural women are younger and more educated, Internet use will have a more pronounced effect on their off-farm work participation. As the number of minors in the household increases, Internet use has a more positive effect on rural women’s off-farm work participation. Additionally, rural women in China’s eastern and central regions are more likely to be positively impacted by Internet use than counterparts from the west. The findings provide new empirical evidence that contributes to the government’s use of the Internet to promote rural female off-farm work participation.

Determinants of Smallholder Farmer Labor Allocation Decisions in Uganda

ABSTRACT This study provides evidence on factors that influence household labor allocation decisions and demand for farm labor in Uganda. We estimated a monthly panel data to deal with potential heterogeneity or individual effect and tested for violation of the random effects modeling assumption that the explanatory variables are orthogonal to the unit effects. In addition, we estimated a random effects tobit model that involve explained variables with corner solutions. The results show that exogenous income did not affect off-farm labor supply by liquidity constrained households while liquidity unconstrained households increased the amount of labor supplied to off-farm activities and the amount of labor hired in. Farm size and education of household head improved labor productivity on farm and hence the amount of labor hired. Road proximity improved both the hiring in and out of labor. The household being male headed improved the work hours in the nonagricultural off-farm activities. The findings imply that direct payments such as input provision to the poor may not improve labor employment unless backed with policies that remove bottlenecks and improve opportunities in the labor market. Instead, investment in micro credit institutions, road infrastructure, and education suited to smallholder production needs and policies that improve gender balance in terms of access to productive resources could help alleviate bottlenecks in labor markets and improve resource allocation between farm and off-farm sectors.

Property Rights, Land Circulation and Off-Farm Labor Supply: Evidence from a Land Tenure Reform in China

Property Rights, Land Circulation and Off-Farm Labor Supply: Evidence from a Land Tenure Reform in China

Off-farm income and direct payments—an indispensable diversification strategy of Swiss farmers

Abstract Following the theory of a farm household model, the relations between farm and farmer characteristics, including two different kinds of direct payments, and their effects on the off-farm labour allocation decisions of farm operators were analysed. Swiss farm accountancy data network (FADN) data of the years 2017, 2018, and 2019 for the whole sample and two different income groups were used to model both off-farm labour participation and supply decisions. The results show that diversification into off-farm employment is a highly relevant strategy of Swiss farmers and that direct payments are a complementary income source. Above a certain level, biodiversity payments show a substitution effect, meaning that off-farm participation is reduced. Off-farm labour supply is related not to direct payments but to production type and technology, with dairy and organic farmers having spent fewer days engaging in off-farm employment. Education positively correlates to off-farm labour participation. Even though off-farm income and direct payments are an indispensable income source for Swiss farmers, income-related policy goals cannot be considered achieved in terms of either farm or household income. Whether public money would be better spent on education than on unprofitable farm businesses should be analysed in future studies.

The Pass-Through of International Commodity Price Shocks to Producers’ Welfare: Evidence from Ethiopian Coffee Farmers

Abstract International commodity price shocks may have large impacts on producers in developing countries. In this paper, a unique household panel data from Ethiopia is utilized to show that a decrease in international coffee price has strong pass-through to the consumption of households that rely on coffee production as a main source of livelihood. It also results in decreases in on-farm labor supply (particularly male labor supply) and induces reallocation of labor towards non-coffee fields, but has negligible effect on off-farm labor supply. The decline in consumption has significant consequences on child malnutrition: children born in coffee-producing households during low coffee price periods have lower weight-for-age and weight-for-height z-scores than their peers born in non-coffee households.

Property rights, land circulation and off-farm labor supply: evidence from a land tenure reform in China

Weak property rights over land prevent efficient allocation of production factors in the developing world. Farmers who lack title secure access to the land they work by providing evidence of productive use. The ``use it or lose it'' principle leads to a thin land rental market and a misallocation of labor between economic sectors. Leverage a land tenure reform in China starting in the late 1990s, I investigate the extent to which secure property rights increase allocative efficiency of land and labor. I exploit implementation of land policies with staggered timing to show that secure property rights led to 1) more land rental participants and a higher share of rented farmland and 2) a reallocation of rural labor towards the non-farm sector. To examine if there is a redistribution of farmland to productive farmers, I estimate a discrete choice model in which leases are categorized based on the relationships between landlords and tenants. The estimation shows that secure property rights lead to landlord-tenant matches that are less driven by relationship and location, indicating a more efficient allocation of land. I further apply the model to labor allocation and find that off-farm workers are more likely to migrate out of their hometowns than to work locally. I finally estimate the welfare impact of the land reform and find that a one standard deviation increase in land right intensity leads to 25\% increase in durable goods consumption.

Off-farm employment and grain production change: New evidence from China

How does off-farm employment affect grain production? Previous research findings are inconsistent. This paper provides a general theoretical framework to explain the effect of off-farm employment on grain production and consider that the effect is non-liner. The empirical results show that off-farm employment decreases grain production and insignificantly changes grain crop structure. Importantly, we find an inverted-U correlation between off-farm employment and grain production, meaning that off-farm employment will increase grain production when the off-farm labor supply is relatively low and will decrease grain production when the off-farm labor supply is relatively high. Further, we investigate the heterogeneity of the causal effect in the destinations of off-farm employment, household's land scale, land features, household location, and household aging.

Land consolidation as technical change: Economic impacts in rural Vietnam

Abstract This paper deepens the economic analysis of the effects of land consolidation – reduction of land fragmentation. It does this in the context of rural Vietnam, studying whether land consolidation promotes or hinders the Vietnamese government’s policy objectives of encouraging agricultural mechanization and stimulating the off-farm rural economy. The analysis views land consolidation as a form of technical change, making it possible to apply the rich insights developed in the economic literature on that subject. This treatment reveals that the economic impacts of land consolidation depend partly on its factor bias and partly on the degree to which labor is substitutable in production for other factors. At a theoretical level, if a technical change is factor neutral, it will reduce off-farm labor supply and slow rural structural transformation away from agriculture; if it is labor-augmenting and the elasticity of substitution between factors is low enough, the opposite effects are predicted. The paper studies these issues empirically for rice production in Vietnam, focusing on the impact that consolidation of rice land has on rice production, machinery use, and labor allocation. The findings confirm that land consolidation raises both farm productivity and farm income and stimulates increased machinery use. It also reduces farm labor supply, lowers labor intensity in farming, and thereby releases more farm labor to off-farm development, consistent with government policy objectives. Based on these findings, the paper concludes that land consolidation should be encouraged through development of land ownership rights and the promotion of land rental markets.

Intra-Household Labour Allocation, Migration, and Remittances in Rural El Salvador

Migration can affect labour participation decisions back home, either by stimulating work to replace foregone labour, or reducing it through the role of remittances. Using evidence from a rural panel for El Salvador with a comprehensive module on agricultural income shocks, this study finds that migration and remittances generate only minor labour reallocation effects within households. Contradicting previous evidence based on cross section data, no impact is registered for off-farm labour supply. However, remittances and migration tend to increase female participation and hours worked in agricultural activities, and reduce time dedicated to off-farm and domestic activities. No major effects are found on self-employment.

Grain subsidy, off-farm labor supply and farmland leasing: Evidence from China

This study investigates the impact of direct grain subsidy and off-farm labor supply on farmland leasing options in China, using multinomial logit and farm household-level data. Results show that the grain subsidy has a significant and positive effect on both leasing out and leasing in farmland in rural China. Rural households with an increased share of full-time off-farm workers are more likely to lease out farmland and less likely to lease it in. Older operators and households with less educational attainment are less likely to lease in farmland. Large farms are likely to both lease out and lease in farmland. Finally, the Land Shareholding Cooperative System (LSCS) plays an important role in China's farmland leasing market.

Too Risky to Focus on Agriculture? An Empirical Study of China’s Agricultural Households’ Off-Farm Employment Decisions

This paper investigates China’s agricultural households and their individual members’ off-farm labor supply decision in response to farm production risks and a number of other factors (e.g., demographic characteristics, farm characteristics, and local market features). Whether and to what extent farming risks may affect farmers’ off-farm employment in China are rarely studied. Our paper provides an empirical study to demonstrate that agricultural production risks significantly impact off-farm labor supply in rural China. The impacts of associated variables on households off-farm labor supply decisions are quantified using a sample of large–scale nationwide household finance survey in 2010. The results suggest that off-farm employment serves as a risk adaption strategy for Chinese farmers. Policy suggestions on retaining farmers to focus on agricultural production are discussed.

Agricultural disaster programs and family farm labor supply in Taiwan

PurposeThe purpose of this paper is to investigate the effects of disaster relief payments on on-farm and off-farm labor supply of farm households in Taiwan. The effectiveness of the policy amendments of the disaster relief assistance programs is also examined.Design/methodology/approachA unique sample of 124,827 persons living in the family farm household in 2009, 2011, 2012, 2013 and 2014 was used. This sample was merged into the township-level administrative profile of all of the recipients of agricultural disaster relief payments from the Natural Disaster Program in Taiwan. A fixed effect panel data model was estimated to analyze the impacts of disaster relief payments on each individual’s labor supply decision.FindingsNatural disaster payments significantly reduced individual’s propensity to work on the farm. Moreover, the higher of the payments, the higher(lower) possibility of the individual to engage in on-farm(off-farm) work. In addition, an increase in the amount of disaster payments can increase the on-farm labor supply of family farm members.Research limitations/implicationsDue to data unavailability, an individual-level panel data set is not used. Future studies can check the robustness of the finding using an individual-level panel data set.Originality/valueThis paper contributes to the limited empirical evidence on agricultural relief programs.

Conservation Payments, Off-Farm Labor, and Ethnic Minorities: Participation and Impact of the Grain for Green Program in China

The Grain for Green program in China, a nationwide cropland set-aside program aimed at soil erosion prevention and poverty alleviation, was begun in 1999 and quickly expanded to 25 provinces, covering 32 million households. Its effects on participating households are well studied, but the role of ethnic characteristics is less well investigated. Given the overlap of areas covered by Grain for Green and areas inhabited by ethnic minorities, where development is a long-unresolved problem, it is important to determine how ethnic minorities react to, and benefit from, the Grain for Green program. This study investigates participation in the program by ethnic minorities and estimates its impact on their off-farm labor supply, compared with that of the ethnic majority, Han. We find that ethnic minorities were more likely to participate in the program, but enrolled similar area of land per household. However, ethnic minorities did not increase off-farm labor supply after participation in Grain for Green, while Han participants increased their off-farm labor supply significantly. These findings raise concerns that Grain for Green may have widened the income gap between Han and ethnic minorities. This study also provides important policy implications on sustainable land management for less-developed regions.

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

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.

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

Resource-dependent households often diversify their income. We model demand for remittances and supply of off-resource labor as a joint decision, and discuss household trade-offs. We extend the off-farm labor supply literature to a rural fishery, contrasting our results to common findings in the farm literature and providing empirical evidence of the interdependence between education and family structure in determining income diversification. Using a unique dataset from Malaysia, we find that more-educated households are less likely to diversify their income, with caveats depending on family composition. Policy implications for resource management in a remittance economy with alternative livelihoods are discussed.

Do Natural Disasters Change Savings and Employment Choices? Evidence from Bangladesh and Pakistan

We investigate the economic response of households to natural disasters in Bangladesh and Pakistan. In particular, we explore to what extent households adjust their income and employment strategies and savings in response to exposure to floods and storms. Using two unique panel datasets, we find evidence of autonomous adjustments in both countries. In Bangladesh, farmers move away from farm to nonfarm employment as a coping strategy to tackle immediate reductions in their total household income from exposure to disasters, whereas nonfarmers increase their off-farm labor supply. Such adjustments in employment strategies are stronger among the storm-affected households than the flood-affected households. On the other hand, although farmers in Pakistan move away from agriculture as an immediate response to disasters, they eventually come back to agriculture within a year of disaster exposure. We also identify that such adjustments in employment and income strategies help farmers to overcome the immediate losses from disaster exposure as the disaster-affected households from both Bangladesh and Pakistan exhibit at least no decrease in their savings behavior. We discuss policy implications in terms of developing nonfarm employment opportunities to reduce the future harms of disaster and financing economic migration to reduce income vulnerability.

Farm income variability and off-farm employment in Ireland

Purpose The purpose of this paper is to identify the potential relationship between farm income variability and off-farm employment decisions in the short and medium term for the case of Irish farm operators. Design/methodology/approach Panel probit models of off-farm labour supply are estimated using Teagasc National Farm Survey data for Irish farms. The framework is based largely on standard expected utility but includes a constraint for recent employment history. Findings The analyses identifies some evidence of a positive association between farm income variability and off-farm employment in the medium term but no significant relationship in the short term. This suggests that off-farm employment is part of a wider portfolio decision but is not a strong solution to short-term farm income shocks. Practical implications European farmers increasingly face high income variability but financial risk management tools are not sufficiently developed or widely accessible to assist farmers in managing the associated risk. This deficiency can have negative implications for household economic welfare and future farm investments and hence the future farm income. Off-farm employment can form part of a wider medium-term portfolio strategy but more effective tools are also required for risk management particularly in dealing with short-term volatility and where off-farm employment is not a realistic endeavour given time constraints and/or demographics. Originality/value The estimation of farm income variability includes a detrending method thus reducing the likelihood of overestimating farm income variability for farms in deliberate expansion or decline. While previous research has typically focused on the short-term response of farmers to historical farm income variability, this research has distinguished between the short and medium term.

Determinants of Off-Farm Labor Supply among Farming Households in Akwa Ibom State, Nigeria

The study analyzes the various determinants of off-farm labor choice decision in Akwa Ibom State, Nigeria. Primary data collected from 120 respondents were employed in the study and analyzed using the logistic regression model. Result of the socio-economic characteristics of respondents revealed the prevalence of female farmers (63.3%), majority which were married (50%) with average household size of eight persons. Majority were educated with average experience of eighteen years. The prevailing off-farm work typology and pattern in the study area were self-employment (50%) and part time engagement (63.3%). Result of the logistic regression revealed that farm size, household size, total annual off-farm income and educational attainment of respondents were the major determinants of off-farm labor choice decision in the study area. This informed the need to pursue policies that would enhance educational attainment in the study area, enhance and stabilize income in the off-farm sector as well as educating and enlightening rural households, especially women on the benefit of off-farm work and the creation of enabling environment in rural areas through infrastructure provision with view to reducing migration to urban areas in search of off-farm work as the way out.

Off-Farm Labor Supply and Correlated Shocks: New Theoretical Insights and Evidence from Malawi

AbstractWe offer new conceptual insights into the understanding of occupational choice in uncertain rural environments, with a focus on its ex ante (before a shock) and ex post (after a shock) consequences for farmers belonging to different portions of the asset distribution. We model theoretically the choice between relatively safe subsistence farming, higher return but higher risk cash crop activities, and off-farm labor—conditional on preexisting asset allocation—and look at the general equilibrium labor market implications of correlated shocks. Our results, backed by evidence from Malawi, challenge some stylized perceptions in the literature on consumption smoothing via off-farm labor supply.