Income diversification and entry barriers: evidence from the Tigray region of northern Ethiopia

Farm households diversify their income sources into off-farm wage employment motivated by low farm income and availability of surplus family labor, whereas they enter into off-farm self employment to earn an attractive return. Farm households have upward-sloping, although inelastic, off-farm labor s...

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Bibliographic Details
Published in:Food policy 2001-08, Vol.26 (4), p.351-365
Main Authors: Woldenhanna, T., Oskam, A.
Format: Article
Language:English
Subjects:
Agrarische Economie en Plattelandsbeleid
Agricultural Economics and Rural Policy
Agricultural Economics and Rural Policy Group
Barriers to entry
Diversification
Employment
Entry barrier
Ethiopia
Farms
Households
Income
Income diversification
Leerstoelgroep Agrarische economie en plattelandsbeleid
MGS
Off-farm employment
Policy studies
Tigray
Wage rates
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Summary:Farm households diversify their income sources into off-farm wage employment motivated by low farm income and availability of surplus family labor, whereas they enter into off-farm self employment to earn an attractive return. Farm households have upward-sloping, although inelastic, off-farm labor supply curves. Therefore, increasing the availability of off-farm activities and improving the wage rate received by farm households can expand the economic activity of the Tigray Regional State. Due to entry barriers, relatively wealthy farm households may dominate the most lucrative rural non-farm activities such as masonry, carpentry and petty trade. Hence the underlying factors that hinder participation in non-farm activities such as credit constraints and lack of skill may have to be addressed through the provision of credit and technical training for the poor.
ISSN:0306-9192
1873-5657
DOI:10.1016/S0306-9192(01)00009-4