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Off-farm labor supply and correlated shocks: New theoretical insights and evidence from Malawi


Dimova, Ralitza; Gangopadhyay, Shubhashis; Michaelowa, Katharina; Weber, Anke (2015). Off-farm labor supply and correlated shocks: New theoretical insights and evidence from Malawi. Economic Development and Cultural Change, 63(2):361-391.

Abstract

We offer new conceptual insights into the understanding of occupational choice in uncertain rural environments, with a focus on its ex ante (before a shock) and ex post (after a shock) consequences for farmers belonging to different portions of the asset distribution. We model theoretically the choice between relatively safe subsistence farming, higher return but higher risk cash crop activities, and off-farm labor—conditional on preexisting asset allocation—and look at the general equilibrium labor market implications of correlated shocks. Our results, backed by evidence from Malawi, challenge some stylized perceptions in the literature on consumption smoothing via off-farm labor supply.

Abstract

We offer new conceptual insights into the understanding of occupational choice in uncertain rural environments, with a focus on its ex ante (before a shock) and ex post (after a shock) consequences for farmers belonging to different portions of the asset distribution. We model theoretically the choice between relatively safe subsistence farming, higher return but higher risk cash crop activities, and off-farm labor—conditional on preexisting asset allocation—and look at the general equilibrium labor market implications of correlated shocks. Our results, backed by evidence from Malawi, challenge some stylized perceptions in the literature on consumption smoothing via off-farm labor supply.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:06 Faculty of Arts > Institute of Political Science
Dewey Decimal Classification:320 Political science
Language:English
Date:2015
Deposited On:31 Dec 2014 08:51
Last Modified:05 Apr 2016 18:40
Publisher:University of Chicago Press
ISSN:0013-0079
Publisher DOI:https://doi.org/10.1086/679193

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