Arbeitspapier
Should Farmers Farm More? Comparing Marginal Products within Malawian Households
According to standard economic theory, households should equate the marginal revenue product of an input across activities within the household. However, this prediction may not hold in the presence of risk. Using data on farm plots and non-farm enterprises in Malawi, we examine the impact of risk on the allocation decisions of agricultural households as they allocate labor across farm and non-farm production. We control for many household and production characteristics, including household fixed effects, and find farm marginal revenue product of labor (MRPL) to be consistently higher than non-farm MRPL. These results hold when restricting estimation to periods of high and low non-farm labor allocation. These results are consistent with farm production being riskier than non-farm production for most households in Malawi. These findings suggest that improved access to insurance of farming activities and wage employment opportunities could increase total household income.
- Language
-
Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 14703
- Classification
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Wirtschaft
Human Capital; Skills; Occupational Choice; Labor Productivity
Agricultural Labor Markets
Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- Subject
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labor productivity
agriculture
non-farm production
risk
efficiency
- Event
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Geistige Schöpfung
- (who)
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Brummund, Peter
Merfeld, Joshua D.
- Event
-
Veröffentlichung
- (who)
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Institute of Labor Economics (IZA)
- (where)
-
Bonn
- (when)
-
2021
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Brummund, Peter
- Merfeld, Joshua D.
- Institute of Labor Economics (IZA)
Time of origin
- 2021
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