Off-Farm Labor Supply and Correlated Shocks: New Theoretical Insights and Evidence from Malawi

摘要

A large part of the rural landscape of developing countries is dominated by subsistence farmers, operating on small or marginal plots of land. In the absence of insurance markets, they take recourse to a number of coping strategies to protect themselves from various risks. Some engage in specialization that involves adoption of production techniques that are resistant to pests, droughts, and other environmental risk factors. For instance, pearl millet, an extremely sturdy cereal grown in sub-Saharan Africa, is known for adapting well to extreme evapo-transpiration, poor sandy soils, and erratic rains. Others resort to consumption smoothing via diversification, some of which involves combining farm and off-farm activities within the same household.