Rural nonfarm activities and poverty in the Brazilian northeast

This paper combines two complementary data sets to present a disaggregated spatial profile of poverty in the Brazilian Northeast, and to investigate the importance of nonagricultural activities for its rural dwellers. We present both univariate and multivariate profiles of nonagricultural employment and discuss its determinants. While the main occupational difference between the rural poor and the rural nonpoor in Brazil seems to be the greater reliance of the former on paid agricultural employment (vis-a-vis own cultivation), rather than access to nonagricultural activities, the evidence nevertheless suggests that diversification into this growing sector provides both an important complement to the budgets of the poor. and possibly a self-insurance mechanism against negative shocks. Despite the substantial heterogeneity of the sector, two general findings are robust: returns to education are comparatively high; and location in relation to urban areas is an important determinant of both employment and earnings in rural nonagricultural activities. (C) 2001 Elsevier Science Ltd. All rights reserved.