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Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data

Author

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  • Sakketa, Tekalign Gutu
  • Gerber, Nicolas
Abstract
The majority of the youth in Ethiopia live in rural areas where agriculture is the main source of livelihood. Using gender- and age-specific values of agricultural labor return (shadow wages), we systematically analyse trends, patterns and prospects of youth’s labor supply in agriculture across space (farm locations). We also analyse whether the household male and female youth members’ agricultural labor supply is responsive to economic incentives. We investigate these using shadow wages estimation techniques applied to farm-household panel data collected during the 2010/11 and 2014/15 agricultural seasons. The results indicate that trends and patterns of the youth’s involvement in agriculture vary across gender and farm work locations, and so do their labor returns. Yet the on-farm participation for youth members is declining across time irrespective of gender, whilst their participation in off-farm activities is increasing. The findings also suggest that changes in agricultural shadow wages matter for the youth’s involvement in the sector, but their impact differs for male and female youth. The results are consistent after controlling for individual heterogeneity, sample selection and instrumenting for possible endogeneity. In addition, we find that youth’s intentions and actual engagement in agricultural production vary greatly. This suggests that the frequent narrative of youth disengaging from agriculture may be a result of methodological flaws or data limitations. Taking into account the intensity of the youth’s involvement in family farm, own farm and off-farm work, the results challenge the presumption that youth are abandoning agriculture, at least in agricultural potential areas of Ethiopia. Instead the youth’s involvement makes an important economic contribution to the operation of the family farm. Therefore, it is necessary to invest in agricultural development to enhance productivity and employment opportunities; and structural transformation that addresses the imperfections and rigidities in labor and other input markets to make agriculture more attractive to youth.

Suggested Citation

  • Sakketa, Tekalign Gutu & Gerber, Nicolas, 2017. "Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data," Discussion Papers 256284, University of Bonn, Center for Development Research (ZEF).
    • Handle: RePEc:ags:ubzefd:256284
    DOI: 10.22004/ag.econ.256284
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    Cited by:

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    2. Congdon Fors, Heather & Houngbedji, Kenneth & Lindskog, Annika, 2019. "Land certification and schooling in rural Ethiopia," World Development, Elsevier, vol. 115(C), pages 190-208.
    3. Romanus Osabohien & Alexander Nimo Wiredu & Paul Matin Dontsop Nguezet & Djana Babatima Mignouna & Tahirou Abdoulaye & Victor Manyong & Zoumana Bamba & Bola Amoke Awotide, 2021. "Youth Participation in Agriculture and Poverty Reduction in Nigeria," Sustainability, MDPI, vol. 13(14), pages 1-19, July.
    4. Denise Hörner & Meike Wollni, 2022. "Does integrated soil fertility management increase returns to land and labor?: Plot‐level evidence from Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 337-355, May.
    5. Kouakou Kouakou, Paul-Alfred, 2020. "Role of trade in natural rubber and palm oil in the composition of GDP in Ivory Coast," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 6(3), September.
    6. Mirzabaev, Alisher, 2021. "Impacts of Extreme Weather Events Under Changing Climate on Household Consumption and Assets Inequality in Uganda," 2021 Conference, August 17-31, 2021, Virtual 315872, International Association of Agricultural Economists.

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    More about this item

    Keywords

    Consumer/Household Economics; Labor and Human Capital;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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