Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data
Based on:
Journal Article (2020)
The success and sustainability of the agriculture sector in Ethiopia require a proper understanding of how households allocate youth labor’s time and whether agricultural labor supply is responsive to economic incentives such as shadow wages. This research explores these questions.
Brief by:
Research collaborators:
This study investigates trends and patterns of youth’s labour supply in agriculture using a calculated shadow wage as an alternative to market wages.
Key findings
Youths provide valuable contributions to family level agriculture.
The perception that young people are not interested in agriculture is not based on evidence, but their participation requires farming to be profitable and training/market opportunities to be accessible.
Investment in youth participation in agriculture could be a good strategy for economic growth and tackling unemployment in areas where agricultural income is high.
What it means
Shadow wage is a more accurate estimate of labor return and agricultural production in settings where markets are imperfect- such as rural areas. Shadow wage can be weakly equated to the productivity of a household or individual.
Rural wage, labour productivity and economic incentives were used to determine the agricultural supply of individuals. This varied by gender, but overall there is no evidence which suggests that youth on-farm participation is decreasing.
Proposed action
Invest in rural areas to provide necessities and make them more liveable
Take gender into consideration in making agriculture attractive to young people
Strengthen human capital in rural/agricultural areas: Formal education and cultural training activities, health, infrastructure
Diversify economic activities that compliment agriculture
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Acknowledgements
Thank you to iDE Global
These insights were made available thanks to the support of iDE Global, who are committed to the dissemination of knowledge for all.
Special thanks to Ben Levett for preparation assistance
We would like to extend a special thank you to Ben Levett, for their invaluable contribution in assisting the preparation of this research summary.
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Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data
Cite this brief: Sakketa, Tekalign. 'Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data'. Acume. https://www.acume.org/r/rural-shadow-wages-and-youth-agricultural-labor-supply-in-ethiopia-evidence-from-farm-panel-data/
Brief created by: Dr Tekalign Sakketa | Year brief made: 2022
Original research:
- N. G., & Sakketa, T., ‘Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel Data’ 48 (pp. 61–105) https://doi.org/10.1108/S0147-912120200000048003. – https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2956283
Research brief:
The success and sustainability of the agriculture sector in Ethiopia require a proper understanding of how households allocate youth labor’s time and whether agricultural labor supply is responsive to economic incentives such as shadow wages. This research explores these questions.
This study investigates trends and patterns of youth’s labour supply in agriculture using a calculated shadow wage as an alternative to market wages.
Findings:
Youths provide valuable contributions to family level agriculture.
The perception that young people are not interested in agriculture is not based on evidence, but their participation requires farming to be profitable and training/market opportunities to be accessible.
Investment in youth participation in agriculture could be a good strategy for economic growth and tackling unemployment in areas where agricultural income is high.
Advice:
Invest in rural areas to provide necessities and make them more liveable
- Invest in agricultural value chain and assist youths in becoming agricultural entrepreneurs
Take gender into consideration in making agriculture attractive to young people
Strengthen human capital in rural/agricultural areas: Formal education and cultural training activities, health, infrastructure
Diversify economic activities that compliment agriculture
- Such as trade, supply, marketing and improve markets for fertiliser and farm land to make them more accessible for young people
Extra:
Shadow wage is a more accurate estimate of labor return and agricultural production in settings where markets are imperfect- such as rural areas. Shadow wage can be weakly equated to the productivity of a household or individual.
Rural wage, labour productivity and economic incentives were used to determine the agricultural supply of individuals. This varied by gender, but overall there is no evidence which suggests that youth on-farm participation is decreasing.