Journal
WORLD DEVELOPMENT
Volume 40, Issue 8, Pages 1634-1646Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.worlddev.2012.04.019
Keywords
rural nonfarm; income dynamics; income diversification; Africa; Ethiopia; impact
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Empirical studies across many developing countries routinely document a positive correlation between participation in rural nonfarm employment and households' wealth or income. This paper explores whether nonfarm employment leads to higher consumption expenditure growth in Ethiopia. We find that: (1) households' consumption expenditure growth is positively correlated with the initial share of nonfarm income; (2) the growth elasticity of nonfarm income share is higher for wealthier households; and (3) the main source of growth for nonfarm participants comes from the higher rates of return participants enjoy on their human and physical capital. (C) 2012 Elsevier Ltd. All rights reserved.
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