Wage and employment effects of Malawi's fertilizer subsidy program

Ricker-Gilbert, J. (2013) Wage and employment effects of Malawi's fertilizer subsidy program. Agricultural Economics, 45. pp. 1-17.

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Abstract

This article uses three waves of nationally representative household-level panel data from Malawi to estimate how a large-scale fertilizer subsidy program impacts the agricultural labor market, known as ganyu in that country. I find that when looking across the entire population of smallholders, receiving an additional 100 kg of subsidized fertilizer causes the average household to supply about three fewer days of ganyu. The fertilizer subsidy program also has a small positive effect on the probability that a household demands agricultural labor, with the results approaching statistical significance. In addition, a 10 kg increase in the average amount of subsidized fertilizer acquired per household in a community boosts the median agricultural wage rate by 1.4% in that community. The increase in wage rates translates to a US $1.40 per year increase in average household income in the years after Malawi's subsidy program was scaled up, and a US $1.86 per year increase in average household income for those who sold their labor before the subsidy program was scaled up. This finding suggests that households who sell their labor off farm may experience some small spillover benefit from the program in the form of higher agricultural wage rates.

Item Type: Article
Additional Information: The author gratefully acknowledges funding support for the data collection and analysis in Malawi from the Department for International Development (DFID)/Malawi, the United States Agency for International Development Malawi Mission (USAID/Malawi), and from USAID’s Economic Growth and Trade Division (EGAT) to the Food Security III Cooperative Agreement at Michigan State University.
Uncontrolled Keywords: Fertilizer subsidy; Labor market; Wage rates; Malawi; sub-Saharan Africa; G38; O13; O20; Q18
Author Affiliation: Department of Agricultural Economics, Purdue University, West Lafayette, IN, USA
Subjects: Social Sciences > Agricultural Economics
Divisions: General
Depositing User: Mr Siva Shankar
Date Deposited: 19 Sep 2013 11:18
Last Modified: 19 Sep 2013 11:18
Official URL: http://dx.doi.org/10.1111/agec.12069
URI: http://eprints.icrisat.ac.in/id/eprint/11751

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