Determinants of Employment Participation in Rural Nonfarm Activities

Kalalto Gashe


The economy of rural areas in developing nations is predominantly based on agriculture and other activities related to agricultural sector. Non-farm activities across the developing world provide about half of total household income and employment source. Thus, employment participation in non-farm sector gains prominence due to increasing inability of the farm sector to support rural livelihoods. This paper establishes a baseline picture of non-farm activities and vindicates the determinants of participation in to and within non-farm sector. Empirical data was taken from a cross-sectional survey of 173households. The study revealed that non-farm sector provides 70% part-time and 9% full-time employment source with an average of 46% of the total household income. Besides, employment in non-farm sector was widely distributed across sex and various types of occupations. Variables like  dependency ratio, years of education, access to credit, crop income,  unearned income, access to social capital, prestige in farming, traditional caste systems and various shocks turn to significantly determine peasants decision. The result from decomposition analysis of participation within non-farm activities showed that educational and socio-economic status of the household, access to credit and sufficient man power are among the key determinant for participation in more remunerative non-farm activities. The implication of the results suggest that with increasing demographic pressure and shrinking land resources, the future of rural employment looks bright in non-agricultural sector. Therefore,  employment in non-farm sector should be given its due share not only in financial sphere but also in development debates.

Keywords: Non-farm, Rural, Determinant, Employment, Participation, Return

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