Ecuador's Rural Nonfarm Sector as a Route Out of Poverty
54 Pages Posted: 20 Apr 2016
Date Written: March 1998
Abstract
The nonagricultural rural sector represents a potentially important route out of poverty in Ecuador. Poverty declines as the share of income from nonagricultural sources rises. Nonagricultural employment and earnings are positively associated with better education and infrastructure access. Poverty could be expected to fall substantially with expansion in nonfarm sectors such as construction, transport, commerce, and services.
Lanjouw analyzes a recent household survey for Ecuador to assess the role of the nonagricultural rural sector in reducing poverty. That sector accounts for roughly 40 percent of rural incomes in Ecuador, three-fourths of which comes from nonagricultural enterprises as opposed to wage labor. The sector provides employment to nearly 40 percent of men and 50 percent of economically active women. The nonagricultural rural sector represents a potentially important route out of poverty: Poverty declines as the share of income from nonagricultural sources rises.
Nonagricultural employment and earnings are positively associated with higher education levels and better access to infrastructure services. Although women are more likely than men to be employed in this sector, their earnings for given education levels and other household characteristics are significantly lower. All other things equal, the greatest fall in poverty could be expected from expanding employment opportunities in transport, commerce-related activities, and such services as administration and the hotel and restaurant trade.
This paper - a product of the Development Research Group - is part of a larger effort in the group to study the role of the nonfarm sector in the rural economy.
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