A Test of Separability of Consumption and Production Decisions of Farm Households in Ethiopia

Christophe Muller (1)

1 GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille

In this paper, we test and reject the separability of production and consumption decisions of agricultural households in Ethiopia, using data from a rural household survey conducted in 1994 and an estimated labour demand equation. We also elicit socio-demographic and asset variables that are positively linked with agricultural labour demands. These results reflect the limited development of fully organised labour markets in rural Ethiopia. They also imply that purely market-driven agricultural policies, e.g., price subsidies or taxes, may have only limited or perverse impacts, and should be complemented by policies directly affecting household decisions, such as food aid, technology transfer, free supply of fertilizers, etc.

Mots clés: agricultural household; separability; Ethiopia

Domaines: Economies et finances

Christophe Muller. A Test of Separability of Consumption and Production Decisions of Farm Households in Ethiopia. 2014. ⟨halshs-00993393⟩