This study investigates trends and patterns of youth’s labour supply in agriculture using a calculated shadow wage as an alternative to market wages. 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 & 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.
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.
The study is based on household and youth panel survey conducted in Oromia region of households selected for the Ethiopian government’s Agricultural Growth Program (AGP). An econometric approach was applied to the data.
The estimation of shadow wage makes assumptions, for example that increasing labor supply equally increases productivity/output. In reality this may be non-linear. Furthermore, working hours were self-estimated by participants, so are liable measurement errors
|Shadow wage||Wage accounting for the marginal product cost of labour (wage per unit of labour)|
|Economic incentives||Financial draws for labour participation, in this case for agriculture|
|Household labor supply||Amount of individuals and time a particular household can supply to agriculture|
Sakketa, T.G. and Gerber, N. (2020), “Rural Shadow Wages and Youth Agricultural Labor Supply in Ethiopia: Evidence from Farm Panel”, Research in Labor Economics, Vol. 48, pp. 61-105.