Farm location and occupational choices in Sub-Saharan Africa: Implications for agricultural households in Tanzania

Abstract

This paper examines how agricultural households in Tanzania use a labor coping strategy in occupational choices between agricultural and non-agricultural sectors due to farm locational effect. It investigates whether agricultural households diversify their income generating activities away from agriculture by using Multinomial logit Marginal Effects model. It employs three rounds panel data from the World Bank's Living Standards Measurement Study (LSMS) carried out in Tanzania as a typical case of SSA economies. The key finding indicates that for each additional kilometer from their residences, households choose non-agricultural self-employment sector by relocating labor from agricultural sector in response to the associated costs and income risks. The comparable results between distant and farmlands nearby households reveal that for farmlands located in each additional kilometer beyond 7.8 km, a typical household relocates away 20 more labor days from agricultural sector compared to the number of days relocated for a similar effect on a farmland located in close proximity to household residence. Meanwhile, the average household allocates 13 more labor days to non-agricultural self-employed sector compared to the number of labor days allocated to a farmland located in close proximity to household residence. There is no empirical evidence on labor movements to and from the non-agricultural waged sector. The policy outlook from the findings implies improvement of rural transport technology and infrastructure in order to curb the income loss due to distant farmlands.