Welfare impacts of non-farm employment in semi-arid areas: evidence from Burkina Faso()

While several studies have linked rural welfare with non-farm employment, the available evidence suggests that whether participation in non-farm employment is welfare improving is intrinsically an empirical question. In addition, the existing literature places emphasis on food and total household expenditure such that there is a dearth of evidence as far as the role of non-food expenditure is concerned. Using household survey data from Burkina Faso, this paper shows that the extent of the impact varies with types of non-farm employment and household expenditure. The results show that participation in wage employment does not affect any type of expenditure. Non-farm self-employment during the dry season increases non-food expenditure but has no significant effect on food expenditure. Non-farm self-employment during both dry and cropping seasons, and total non-farm employment are associated with higher food and non-food expenditures, with higher impact on non-food expenditure. The general pattern of the results suggests that smallholder farmers tend to classify agriculture as the primary source of food while incomes from non-farm sources are preferably oriented towards non-food consumption. From a policy perspective, this shows that promoting the rural non-farm economy will improve welfare in the semi-arid areas. Potential areas of interventions include (i) implementation of the minimum guarantee wage scheme to improve earnings from wage employment and, (ii) development of a vibrant rural credit scheme to improve access to non-farm self-employment.