On-farm wages and labour supply in a rural agrifood system: Evidence from Nigeria

Abstract

Literature presents wage rates in both farm and off-farm markets as important factors that determine households' labour allocation decisions. Using an agricultural household model, we investigate the direct responses of farm households in the agri-food system. The study considered the non-separability of decisions among farmers and applied econometric methods consisting of the use of panel data and the fixed effects estimation technique. The results show that more hours of family labour are supplied with an increase in farm returns, while the amount of labour hired reduces with a rising wage. The study argued that while raising farm wages might affect labour hiring decisions, it is also an incentive that allows household members to sell some of their labour time.