Switching Regression Research Articles

Graduation from Subsistence to Commercial Aquaculture: Evidence on Household Welfare

This paper investigates the possibilities of subsistence homestead aquaculture producers to commercialise using a two-wave panel data of 518 households in Bangladesh. A binary endogenous switching regression model is applied to explore opportunities and constraints of commercialisation and a counterfactual analysis to estimate the effects of commercialisation on income and poverty. The study finds that while there is good potential for commercialisation, only a few households do that. Households who engage in commercial aquaculture achieve higher per capita income and are less likely to be poor. The study also finds that subsistence fish farmers who transform towards commercialised producers tend to receive support from non-government organisations, are members of fish farmers’ associations, and have better access to local fish markets. A major constraint to aquaculture transformation is the lack of government attention to the subsistence-oriented homestead fish producers, thus forgoing a huge potential for reducing poverty and increasing welfare. The paper suggests that fisheries extension services should develop and implement a specifically-targeted aquaculture commercialisation program in cooperation with the agricultural extension.

Towards sustainability in the adoption of sustainable agricultural practices: Implications on household poverty, food and nutrition security

The study assessed the impact of sustainably adopting Sustainable Agricultural Practices (SAPs) on household poverty, food and nutrition security. Different scholars have assessed the impact of adopting agricultural practices including SAPs on livelihoods of smallholder farmers. Nonetheless, through the focus on one-time survey season adoption decisions, the findings on potential impacts of SAPs which are aimed at informing policy direction remain inconclusive. The current study introduced the concept of sustainability in the adoption of SAPs to iron out inconsistences in the adoption of such practices, and hence assessed whether farmers were better off in terms of poverty status, food and nutrition security than their counterparts. Through the use of Selectivity-corrected Endogenous Switching Regression models on a sample of 2100 farmers, the study notes that gender of household head, education of the household head, natural log of household annual income, Tropical Livestock Units (TLU), farmer membership of farmer clubs and village savings and loan groups significantly influenced the probability of smallholder farmers sustaining their adoption of Sustainable Agricultural Practices. Furthermore, the study notes tangible evidence of an improvement in household food and nutrition security by farmers sustainably adopting SAPs as compared to their counterparts. Nevertheless, no evidence exists that sustained adoption of the practices would alleviate poverty of smallholder farming households. The study recommends the development of an agricultural productivity enhancement program that cuts across the gender divide and social barriers of smallholder farmers, further focusing on promoting farmer clubs and village savings groups to ensure sustained adoption of agricultural practices. Such a program should employ a clear targeting strategy with an aim of targeting food insecure as opposed to poor households in order to eradicate hunger.

Comparisons of observed and unobserved parameter heterogeneity in modeling vehicle-miles driven

This study examines potential observed and unobserved parameter heterogeneity in modeling vehicle-miles driven (VMD). This application is both important in its own right, and a vehicle for exploring conceptual, mathematical, and empirical differences among three finite-segmentation ways of addressing such heterogeneity: deterministic segmentation and (endogenous) switching for observed heterogeneity, and latent class models for unobserved heterogeneity. Based on empirical data from about 3,000 Georgia residents, we model weekly VMD, and identify key explanatory variables as well as the different sensitivities to those variables exhibited by various population segments. The study posits that people have different sensitivities to explanatory variables by residence type (urban versus “less urban”), and supporting evidence was found in the deterministic segmentation and endogenous switching models. The switching regression model characterized those who are more likely to live in urban areas, e.g. workers, pro-environmental, and those who are less favorable to driving. In addition, the estimated error correlations in the endogenous switching model corroborated that there are unobserved factors common to the joint decisions of residential choice and VMD generation. The latent class model identified lower and higher VMD-inclined segments and had a better goodness of fit than the other two models. The results confirm that (1) there is notable heterogeneity in the population with respect to the weight given to relevant factors that influence VMD, and (2) accounting for both observed and unobserved heterogeneities is useful in modeling VMD.

Access to credit and agricultural productivity: Evidence from maize producers in Benin

Access to agricultural credit is still a challenge in developing countries. The weakness of agricultural financing prevents producers from acquiring the modern technologies that are essential for the development of their activity. This paper aims to determine the impact of access to credit on agricultural productivity in Benin using alternative measures of productivity. To do this, we use the endogenous switching regression model to control for potential selection and unobserved heterogeneity issues associated with this impact analysis. The data used comes from the statistical databases of the National Agricultural Research Institute of Benin. The results show that the adoption of improved seeds, the geographic location, the area sown and member of peasant organization determine producers’ access to credit are factors that determine producers’ access to credit. Farmers’ access to credit generates an estimated gain of 40.07% and 31.97% respectively for production per hectare and production per FCFA invested. These results require a comprehensive and coherent public action.

Impact of Irrigation on Rice Cultivation Methods among Small Farmers in North Central, Nigeria

Rice production and irrigation are inextricably linked, irrespective of the adopted cultivation system. The study was to examine the impact of irrigation on rice cultivation systems among rice farmers in north central Nigeria. The study involved the survey of 196 active rice farmers in the previous planting season using copies of well-structured questionnaires administered by trained enumerators, and selection of rice farmers was achieved through multistage sampling procedure. Specific objectives were to describe socioeconomic and input characteristics, profiling of irrigation water sources, identification of adopted source of irrigation water by rice farmers, assessment of cultivation system adoption and intensity of rice production and examining factors militating against access to seamless access to irrigation water. Various analytical tools were employed to achieve the objectives, such as descriptive statistics, multinomial logit (MLN), endogenous switching regression (EWR) and Likert Rating Scale (LRS). The result indicated that farm size, farming experience, and annual income were on average of 2.39ha, 23.6 years, and N 646,145.66k. Well water was the most used irrigation source by farmers, with the highest score of 85.2%. The multinomial logit result indicated that the use of boreholes was positively and significantly influenced by distance to water source and years of education, while the use of dams was influenced by gender and the number of cooperative trainings that rice farmers attended during the season. Switching regression results suggested that the correlation coefficient rho_1 and rho_2 were positively significant at p<0.01 and p 0.05, respectively, suggesting that an individual rice farmer who chose to adopt swamp cultivation system had lower rice output in the category than a random individual from the sample would have realized. Farmers were constrained by the shortage of water arising from keen competition for water between them and the herdsmen, while it was recommended that efforts be made to ensure that an early-maturing, drought-resistant, and short-duration rice variety be provided for optimal production that will keep pace with the food needs of an ever-increasing population.

Impact of Urban expansion on income of evicted farmers in the peri-Urban areas of Amhara Regional State, Ethiopia: Endogenous switching regression approach

The rate of urbanization in the Amhara region has apparently increased over the past three decades and is now higher than that of any other region in Ethiopia. As cities expand, peri-urban farmers in the region are being compelled to abandon their landholdings, which is their life-long asset. Therefore, the aim of this study is to investigate the impact of urban expansion on the income of evicted peri-urban farmers in Injibara, Burie and Gish Abay cities of the Amhara regional state, Ethiopia. Using stratified sampling technique, primary data was collected from 393 households (197 evicted and 196 non-evicted). The endogenous switching regression model was employed to examine the impact of urbanization on the income of evicted farmers. The model’s output of ATT revealed that evicted farmers had a substantial reduction in yearly income of 9202.36 Ethiopian Birr as compared to their counterfactuals. In other words, eviction diminishes the annual income of evicted farmers by 26.73%. Furthermore, ATU results also confirmed that non-evicted farmers’ income would have decreased by 4666.78 Birr if they had chosen to be evicted, proving that eviction might have a negative impact on farmers’ income at any circumstance. Therefore, this study suggests that the government conduct a comprehensive socioeconomic and demographic evaluation before evicting indigenous farmers and that an alternative strategy be developed to mitigate the negative effects of eviction on peri-urban farmers.

Assessing the crop productivity and household welfare effects of adopting certified seeds of improved cassava varieties in Uganda

ABSTRACT This article identifies the determinants, crop productivity, and household welfare impacts of adopting certified seeds of improved cassava varieties (c-ICVs) in Uganda. The determinants were identified using the two-part model while the crop productivity and household welfare impacts were assessed using the endogenous switching regression model. The data came from 609 farm households in Uganda’s three major cassava-growing regions (Eastern, Northern, and mid-Western). The results showed that adopters of c-ICVs experienced a considerable increase in productivity (stem and root yields) and improvement in welfare outcomes (cash income and consumption expenditure). The results provide evidence of the effectiveness of the country’s seed certification and genetic improvement efforts over recent years and justify increased investments in genetic improvement and seed certification.

Does youth participation in the farming program impact farm productivity and household welfare? Evidence from Nigeria

One significant issue in the Global South, particularly in sub-Saharan Africa, is youth unemployment. This is a result of the aging and shrinking agriculture industry, increased unemployment rates mixed with a sizable unskilled workforce, and rapid population expansion. Studies have shown that farming programs, when supported by increased investment and regulatory frameworks, provide opportunities for meaningful employment for many young people. This study attempts to estimate the impact of youth participation in farming programs on farm productivity and welfare using rice-growing household data from northern Nigeria. We used propensity score matching (PSM) and endogenous switching regression (ESR) to address biases that may arise from both observed and unobserved factors. Our results show that age, education, household size, farm size, extension, access to credit, and membership of a social group are positive and significantly associated with youth participation in farming programs. The outcome demonstrates that participants fare better than non-participants in terms of farm productivity and welfare status. Furthermore, youth participation in farming programs has implications for heterogeneity within the participant group, which depends on socio-economic characteristics such as access to finance, association membership, and education, emphasizing the need for specific interventions and focusing on particular youth groups. Therefore, access to credit through relevant agencies with low interest rates and flexible payment options, strengthening youth organization could encourage participation in farming programs and job opportunities for the prosperity of the rural economy.

Does contract farming enhance farm efficiency? A case of wheat growers of Haryana, India

This study tries to evaluate the returns to contract farming (CF) in the form of farm efficiency for both contract and non-contract wheat growers in Haryana, North India. Applying the data envelopment analysis and endogenous switching regression model on cross-sectional survey data from 754 wheat farmers, it finds that CF adopters are significantly more efficient than non-adopters. Further, it reveals that farmers who adopt CF would reduce their technical efficiency by 16% if they do not participate in it. But non-adopters would increase their technical efficiency by 12% if they adopt instead. This is attributed to CF provisions of higher quality inputs and improved production technology. However, results also indicate that a small percentage of farmers are dealing with some financial constraints, including delayed payment, high cost of inputs, and lack of timely access to financial assistance. This needs to be addressed adequately in order to enfold the smallholders in the ambit of contracting system.

Does Islamic banking reduce the risks of COVID-19 for SMEs? Novel evidence for SME financing in the pandemic period for an emerging market

This paper aims to examine the effect of COVID-19 on SME bank lending in the Islamic banking sector to small and medium-sized enterprises (SMEs) in an emerging market: Turkey. Understanding whether SME bank lending in the Islamic banking sector is procyclical or not is very important to reduce the impact of COVID-19 on SMEs. Interrupted time series analysis (ITSA), the Markov switching regression model, and vector autoregressive (VAR) methodologies are employed using novel weekly data for the pandemic period. The present study finds that the Islamic banking sector for SME financing has behaved countercyclically during COVID-19 in the Turkish economy. The paper thus sheds new light on the relationship between Islamic bank lending for SME financing and the COVID-19 shock in an important emerging market. The findings can provide insights into how Islamic banks mitigate the effect of COVID-19 on SMEs in an emerging market context. The present paper clearly shows differences between Islamic bank lending toward SMEs and deposit bank lending toward SMEs in the pandemic era. The willingness of Islamic banks to supply loans to SMEs during the pandemic plays a vital role in reducing SME firm failure in the Turkish economy.

Factors influencing trader’s participation in small scale hides and skin business in the leather value chain, among non-pastoralist

Hides and skin, the by-product from cattle and small ruminants (livestock production) forms an important business from the meat industry. Through value addition, the hides and skin are processed to leather. It is the main economic activity in both high potential, Arid and Semi-Arid regions and on small scale in other regions of Kenya. The objectives of this study were to determine the development and sustainability of the leather sector among the non-pastoralist communities. The study was carried out in Nakuru County (0.4254° S, 36.0023° E). Purposive random sampling technique of 100 respondents drawn from 10 sub-counties was used. Both primary and secondary data were used. Key informant interviews and percentiles were used to determine the challenges facing traders in the hides and skin industry. The multinomial logit model was used to determine the factors influencing the participation of the hides and skin traders in the leather sector and combination of the Gross Margin (GM) and the Endogenous Switching Regression (ESR) model to evaluate the impact of the hides and skin business to the income of traders. The main challenge that affects hides and skin traders is fluctuating prices at 56% and the lowest being poor condition of their working premise at 2%. This is a type of business that is passed on from one generation to another because most traders are middle aged or elderly (>45 years old). 35% indicated that their main reason for starting the business was family and had over 10 years’ experience. The study also showed that ownership of registered business earns more income by $18 and on the contrary a reduction of income by $54. In conclusion proper utilization of hides and skin will not only earn income to the traders but will also minimize on wastage of a useful resource which is by-product from livestock industry that supports a valuable leather industry.

Does Farmers’ Lottery Participation Affect Technical Efficiency of Banana Production in Rural China?

Increasing the agricultural technical efficiency is crucial to poverty reduction for smallholder farmers in developing countries. This study attempts to examine the impact of farmers’ lottery participation on technical efficiency from the perspective of the farmers’ revealed risk preferences, and to explore the influence mechanism between lottery participation and technical efficiency, based on the primary data collected from banana farmers in rural China. We used data envelopment analysis (DEA) to measure the combined technical efficiency of the farmers and constructed an endogenous switching regressions (ESR) model to analyse the impact of lottery participation on the technical efficiency of banana farms. A quantile regression model was used to analyse the heterogeneous effects under the different levels of the farmers’ technical efficiency. Then, a mediation model was employed to clarify the influence mechanism of lottery participation on technical efficiency in terms of two pathways: the adoption of biopesticide and the soil improvement technique. The empirical results show that farmers’ lottery participation revealed their risk preferences and several factors affected banana farmers’ participation in the lottery. Specifically, male farmers are more likely to participated in the lottery than female; farmers’ working hours negatively affected their lottery participation; and the use of a smartphone significantly increased the likelihood of farmers buying lottery tickets. We also found that farmers who participate in the lottery have higher technical efficiency in banana production, and the average treatment effect of lottery participation on the technical efficiency was 21.5%, indicating that the farmers with revealed risk preferences can significantly promote technical efficiency. The effect of risk preferences on economic performance is more significant for farmers at the middle technical efficiency level. The explanation is that the adoption of new technologies (e.g., biopesticides) played a mediating effect between farmers’ lottery participation and their technical efficiency. New technologies are more likely to be adopted by farmers who participate in the lottery, resulting in higher technical efficiency. Therefore, policymakers and stakeholders can better design technology extension programs according to the different attitudes of the target farmers towards risks in developing regions.

Equity in the public social healthcare protection in Tanzania: does it matter on household healthcare financing?

Efforts to promote equity in healthcare involve implementing policies and programs that address the root causes of healthcare disparities and promote equal access to care. One such program is the public social healthcare protection schemes. However, like many other developing countries, Tanzania has low health insurance coverage, hindering its efforts to achieve universal health coverage. This study examines the role of equity in public social healthcare protection and its effects on household healthcare financing in Tanzania. The study used secondary data collected from the National Bureau of Statistics' National Panel Survey 2020/21 and stratified households based on their place of residence (rural vs. urban). Moreover, the logit regression model, ordered logit, and the endogenous switching regression model were used to provide counterfactual estimates without selection bias and endogeneity problems. The results showed greater variations in social health protection across rural and urban households, increasing disparities in health outcomes between these areas. Rural residents are the most vulnerable groups. Furthermore, education, income, and direct healthcare costs significantly influence equity in healthcare financing and the ability of households to benefit from public social healthcare protection schemes. To achieve equity in healthcare in rural and urban areas, developing countries need to increase investment in health sector by reducing the cost of healthcare, which will significantly reduce household healthcare financing. Furthermore, the study recommends that social health protection is an essential strategy for improving fair access to quality healthcare by removing differences across households and promoting equality in utilizing healthcare services.

Adoption and ex-post impacts of sustainable manure management practices on income and happiness: Evidence from swine breeding farmers in rural Hubei, China

Swine manure has become rural China's primary source of agricultural non-point pollution. Various sustainable manure management practices (SMMPs) have been promoted in rural areas. Although SMMPs are becoming more popular, little evidence exists regarding their ex-post impacts. Using survey data from 710 swine breeding households in rural Hubei, China, this paper estimates the adoption and impacts of SMMPs on household income and happiness. This paper discusses the use of an endogenous switching regression model to solve the endogeneity problem that arises from both observable and unobservable factors. The results showed that 48.5% of farmers sampled adopted SMMPs. Furthermore, on average, the adoption of SMMPs was associated with a 28.7% increase in household income per capita and a 22% improvement in happiness. Then robustness tests were conducted to verify these results. Several factors influence the adoption of SMMPs, including health, swine breeding scale, swine breeding experience, technical training, internet, waste management facility and previous adoption experience. These findings highlight the importance of promoting SMMPs in rural areas to increase farmer income and enhancing their perceived happiness, and measures should be taken to scale up their adoption of SMMPs.

Behavioral influences on the relationship between firms' aspiration performance gap and innovation input: The moderating role of executives' vocational socialization

AbstractWhile extant research shows a curvilinear relationship between aspiration performance gaps and innovation input, we know far less about how vocational experiences of key firm decisions makers may shift this relationship. We propose the concept of executives' vocational socialization and explore how it influences the relationship between firms' aspiration performance gaps and innovation input from the perspectives of the behavioral theory of the firm and upper echelons theory. We theorize that two aspects of executives' vocational socialization, namely, executives' technical career experience and firm tenure, strengthen the inverted U‐shaped relationship between the negative aspiration performance gap and innovation input and weaken the U‐shaped relationship between the positive aspiration performance gap and innovation input respectively. We test these hypotheses using a panel dataset of 1158 listed firms in China from 2008 to 2017, and the empirical results from switching regression and fixed‐effect models support our hypotheses. Our study contributes to research on the aspiration performance gap, innovation input, and behavioral theory of the firm.

Effect of integrated sustainable land management technologies on households’ food security in the North Gojjam sub-basin, Blue Nile River

Integrated Sustainable Land Management (ISLM) is progressively viewed as a key strategy to boost food security in Ethiopia and feed its growing population. By understanding this logical ground, this paper examines the effect of ISLM technologies adoption on household food security. The study relies on cross-sectional household-level data collected from 414 randomly selected household heads across three districts to analyze this issue. An Endogenous Switching Regression (ESR) model coupled with the Full Information Maximum Likelihood (FIML) technique was applied to analyze the required data. The finding shows that the adoption of ISLM technologies has significantly increased food security. It specifically increases food consumption expenditure in households by ETB (national currency in Ethiopia; as of August 2021, 1 ETB is equal to approximately USD $0.02) 38.3 (27%) when compared to households that do not adopt groups. Similarly, it increases the adopter households’ dietary diversity by 14.5%. Furthermore, it plays a significant role in reducing the food gap period by one and a half months per year and the food insecurity access scale by 46% points in the north Gojjam sub-basin for those who adopted versus those who did not adopt. The policy implication is that the adoption of ISLM technologies can improve rural household food security and may be used as a means of reducing rural poverty. As a result, the adoption of ISLM technologies should have been promoted in the study area and elsewhere by inspiring land users by accessing external agricultural inputs at the right time and place to increase small-scale land productivity.

Effect of Consumers’ Acceptance of Indigenous Leafy Vegetables and Their Contribution to Household Food Security

In the past decades, indigenous leafy vegetables (ILVs) have played a significant role in household food security, especially in poor rural households. However, ILVs have been replaced by exotic cash crops in the contemporary world. This study was conducted to assess the consumption of indigenous leafy vegetables and their contribution to household food security of households in Limpopo and Mpumalanga provinces. The study used secondary data collected by the South African Vulnerability Assessment Committee in 2016. A total of 1520 respondents were selected using a multistage sampling method. The results from descriptive statistics revealed that most consumers did not produce ILVs but consumed them. Meanwhile, a small number of people produced ILVs yet did not consume them. The results from the Household Food Insecurity Access Scale (HFIAS) showed that a large proportion of the population experienced moderate food security while some of the individuals within the population experienced severe food insecurity. An endogenous switching regression model (ESRM) was employed to analyze the impact of the consumption of ILVs on household food security. The results revealed that only a few variables of the consumption of ILVs were significant and positive (household size, wealth index, and ‘if the disabled person receives grants’). As a result, the consumption of ILVs had a minimal impact on the household food security of the Limpopo and Mpumalanga provinces. The findings further revealed that age, gender, and education variables negatively influenced the consumption of ILVs. Thus, the recommended programs must be established to educate people about the importance of consuming ILVs. Agricultural extension services must equally promote the consumption of exotic cash crops and ILVs. Lastly, policies can contribute by increasing the diversity of ILVs left at retail outlets through diverse production.

Unlocking the potential of smallholder dairy farm: Evidence from the central highland of Ethiopia

Sustainable livestock farming practices have the potential to improve productivity and high income, reduce greenhouse gases, and improve household food security. Despite previous efforts to disseminate these technologies, the rate of adoption has remained very low in Ethiopia. In this study, we investigate the determinants of adoption and the impact of improved dairy farming practices (IDFP), which include improved breed, improved feed, and improved feeding conditions, on household food security in the central highland of Ethiopia. A multi-stage stratified random sampling technique was used to select 480 smallholder farmers from four districts. The study employed principal component analysis (PCA) to group IDFPs, and the endogenous switching regression model (MESR) was used to examine household food security status. Our findings showed that IDFP adoption had a significant and positive impact on per capita food consumption and increases the likelihood of smallholder farmers being food secure compared to non-adopters. The adoption of integrated IDFP had a greater impact on household food security when smallholder farmers used a package that incorporates improved breeds, feeds, and feeding systems (B1F1S1). The implementation of this package increased food security by 31% in terms of household food consumption score (HFCS) and 26% in terms of household diet diversity score (HDDS). Additionally, the size of livestock holdings, off-farm income, extension services, and milk collection centers all influenced the adoption decision of this package. It has been confirmed that improving dairy farming practices for sustainable development can significantly contribute to the food security of smallholder farmers when used in combination. Interventions that address access to farm resources, the supply chain for technological inputs and services, and output markets may assist in the adoption of dairy technologies.

Adoption des Politiques de Protection de l'Environnement et performance des Entreprises Camerounaises

AbstractThe objective of this paper is to evaluate the effect of the environmental protection policies of by Cameroonian firms on their performance. It uses the endogenous switching regression technique and propensity scores applied to micro‐data from 639 firms in Cameroon. The results show that only 17% of firms adopt these measures, while on average 85% of firms produce solid, gaseous or liquid waste. The results also indicate that the adoption of these environmental protection policies increases operating costs while significantly improving the turnover and the performance of the productive capacity of the company. These increases are 39.11%, 58.6%, and 38.63% for operating costs, turnover and return on productive capacity of the company, respectively. However, firms can also suffer significant losses resulting from the non‐adoption of environmental policies. In fact, firms that do not adopt environmental protection policies have their performance reduced by an average of 1.625 percentage points.

Impact of adopting maize hermetic storage technologies on smallholder farmers’ income in Gatsibo District, Rwanda

Rapid population growth has increased the global demand for food. However, some studies have revealed that more than one-third of the global food production is lost during postharvest operations along the food supply chain. Managerial and technical limitations such as a lack of proper storage facilities, poor handling practices and, associated knowledge are among the main causes of food losses particularly in Africa. Maize is among the most important staple food and cash crops across sub-Saharan Africa. In Rwanda, most of the maize produced incurs losses during storage. Hermetic storage technologies (HST) have been proven to be effective in the control of post-harvest storage losses in maize. However, their adoption in maize storage has been low with farmers continuing to use less effective technologies. Therefore, this study assessed the impact of hermetic maize storage technologies adoption, on the income of 301 randomly selected smallholder maize farmers in Gatsibo District of Rwanda, using the endogenous switching regression (ESR). The results revealed that household size, post-harvest training, access to credit, distance to input provider, and the household head's experience in maize production were the major factors influencing farmers' decision to adopt HST. The occupation of the household head, number of plots reserved for other crops, training, household size, age of the household head, and household maize self-sufficiency goal significantly influenced income for both HST adopters and non-adopters. Overall, the adoption of HST had a positive and significant impact on income from stored maize, among those who adopted it. The study recommends that the government of Rwanda and other stakeholders should support the dissemination of HST to facilitate access. Thus, increased access to institutional support services such as post-harvest training, credit access, and agricultural input supply, should be a major part of efforts aimed at promoting the effective use of hermetic maize storage technologies among smallholder maize farmers in Rwanda.