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Social Networks and Factor Markets: Panel Data Evidence from Ethiopia

Kibrom Abay, Goytom Kahsay and Guush Berhane

Journal of Development Studies, 2018, vol. 54, issue 1, 174-190

Abstract: We investigate the role of an indigenous social network in Ethiopia, the iddir, in facilitating factor market transactions among smallholder farmers. We use detailed longitudinal household survey data and employ fixed effects estimation approaches to identify the effect of iddir membership on factor market transactions among farmers. We find that joining an iddir network improves households’ access to land, labour and credit transactions. Our findings also hint that iddir networks may crowd-out borrowing from local moneylenders (locally referred as ‘Arata Abedari’), a relatively expensive credit source. These results suggest that non-market institutions can play crucial roles in facilitating market transactions.

Date: 2018
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Related works:
Working Paper: Social Networks and Factor Markets: Panel Data Evidence from Ethiopia (2015) Downloads
Working Paper: Social Networks and Factor Markets: Panel Data Evidence from Ethiopia (2014) Downloads
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DOI: 10.1080/00220388.2017.1288224

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