Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe

Cornilius Chikwama

No 403, CERT Discussion Papers from Centre for Economic Reform and Transformation, Heriot Watt University

Abstract: This study examines the widely held view that rural off-farm income, in particular that earned from rural wage employment, may assist households in overcoming credit constraints when making farm investments. The analytical results of the study show that rural wage employment income can only assist in raising farm investment if it can be saved at positive rates and households face high-unemployment, i.e., they have idle labour. When there is no unemployment in the household or when unemployment is very low, increased availability of rural wage employment will in fact lead to "de-agrarianisation". Although the study finds evidence for high-unemployment from a 3-year panel data set of 359 households in 3 Resettlement Schemes in Zimbabwe, it finds no evidence that existing rural wage opportunities contribute towards raising households' farm investment. This is attributed to the fact that the savings rate for rural wage income is not significantly different from zero.

Keywords: off-farm income; rural wage employment; farm capital; agricultural development (search for similar items in EconPapers)
JEL-codes: J40 O12 O18 R20 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dev, nep-geo and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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