Rural Non-Farm Employment and Household Welfare: Evidence from Malawi

66 Pages Posted: 13 Jun 2017

See all articles by Guigonan Serge Adjognon

Guigonan Serge Adjognon

World Bank

Lenis Saweda O. Liverpool-Tasie

Michigan State University - Department of Agricultural, Food and Resource Economics

Rui Benfica

Independent

Alejandro de la Fuente

World Bank - Poverty and Equity Global Practice

Date Written: June 8, 2017

Abstract

This paper uses nationally representative panel data and a combination of econometric approaches, to explore linkages between rural non-farm activities (wage and self-employment) and household welfare in rural Malawi. The paper analyzes the average treatment effects and distributional effects on participants' welfare indicators, such as households' per capita consumption expenditures. Then it investigates the effects of non-farm activities on the use of agricultural inputs, one channel through which non-farm employment might improve the welfare of rural households. Although participation in non-farm activities is not randomly assigned in the data, the identification strategy relies on fixed effects and correlated random effects estimation methods, dealing effectively with time invariant heterogeneity, coupled with geographical covariate adjustments, controlling for time varying differences in local market conditions and employment opportunities. The results suggest that non-farm wage employment and non-farm self-employment are welfare improving and poverty reducing. However, households at the lower tail of the wealth distribution benefit significantly less from participation than the wealthiest. Although the results support the promotion of the rural non-farm economy for poverty reduction purposes, they indicate that targeted interventions that improve poor households' access to high-return non-farm opportunities are likely to lead to bigger successes in curbing rural poverty.

Keywords: Rural Labor Markets

Suggested Citation

Adjognon, Guigonan Serge and Liverpool-Tasie, Lenis and Benfica, Rui and de la Fuente, Alejandro, Rural Non-Farm Employment and Household Welfare: Evidence from Malawi (June 8, 2017). World Bank Policy Research Working Paper No. 8096, Available at SSRN: https://ssrn.com/abstract=2985523

Guigonan Serge Adjognon (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Lenis Liverpool-Tasie

Michigan State University - Department of Agricultural, Food and Resource Economics ( email )

MI
United States

Rui Benfica

Independent ( email )

Alejandro De la Fuente

World Bank - Poverty and Equity Global Practice ( email )

1818 H Street, NW
Washington, DC 20433
United States

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