Determinants of Farmers' Participation in Off-farm Activities and its Impact on Income Equality in Marvdasht County

Document Type : Research Article

Authors

• Gh. Layani ¹
• M. Bakhshoodeh ²
• z. Ahmadikia ³

¹ Department of Agricultural Economics, Sari Agricultural Sciences and Natural Resources University, Sari, Iran

² Department of Agricultural Economics, Shiraz University, Shiraz, Iran

³ Agricultural Economics, Shiraz University, Iran

https://doi.org/10.22067/jead.2020.39301

Abstract

Introduction: Off-farm activities have become an important component of livelihood strategies among rural households in most developing countries. According to available evidence, off-farm income is an important source of income for most rural households, which is important for economic, governmental and nongovernmental organizations, and international representatives of development and advancement. Several studies have reported a substantial and increasing share of off-farm income in total household income. Reasons for this observed income diversification includes declining farm income and the desire to insure against agricultural production and market risks. Non-agricultural activities, which are referred to as off-farm activities, are part of the rural economic sector, which is essential for improvement and assistance that can be referred to as an economic incentive for activities as well as field activities. Due to the development of off-farm activities in rural areas, its share of income has slowly increased and off-farm incomes appear as a contributing factor to the flow of income, which is due to its low income variation. Off-farm activity is a factor in creating diversity in activities and strategies to increase incomes, especially in the time of farm production decline among rural households. Using the theory of time allocation of households, \ incentives to allocate time to out-of-field activities, which not only relate to wage factors but also family structure and individual preferences, are identified.
Materials and Methods: In order to investigate the effect of various factors on having an off-farm activity, regression models with a dummy dependent variable are required. Farmers' time allocation to different activity is a function of some variables, such as individual, regional and family characteristics. The model used in the present study is as follows:



 
 



In which the dependent variable is a multiple choice that in this study shows employment in various activities including agriculture, activities related to agriculture and non-agricultural activities. The multinomial logit model was used to investigate the factors affecting the time allocation of farmers in Marvdasht. Another objective of the present study is to answer the question of whether off-farm activity will increase or decrease income inequality. To measure the inequality created by each source of income, the income-resource variance was used. The percentage of total inequality decomposition is obtained from the following formula. It shows the extent to which inequality is created for each source of income.



 
 



Results and Discussion: Based on the results, comparing the results of the Logit model and the multinomial logit model indicate that the type of non-agricultural activities is important in the allocation of time and the establishment of various policies for the development of off-farm activities. The level of education has a positive effect on off-field employment due to its effect on creating more job opportunities for individuals. The amount of land owned by the farmer was another important factor in the implementing off-farm activities unrelated to agriculture. According to the results in Marvdasht County, variables such as age, education, livestock breeding, number of extension classes, number of dependent persons, household expenses, expenditure to agricultural income, family labor force and car value have a significant effect on the probability of time allocation to outside activities related to agriculture. Regarding agricultural activities, all variables except for the history of land use and land use ratio have a significant effect on the dependent variable. Also, based on the results, the lowest and largest share of income inequality in households are related to the off-farm activities which is unrelated to agriculture and farming, respectively. Creating the necessary facilities to increase the level of education of households, encouraging off-farm activities for small farmers, along with investing in the development of off-farm activities in rural areas can help to allocate their time to non-agricultural activities along with agriculture and increase income equality.

Keywords

• Income inequality
• Multinomial logit
• Off-farm activities
• Time allocation

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