Ramifications of Households Non-farm Income on Agricultural Productivity: Evidence from Rural Area of Pakistan

Year 2020, Volume: 17 Issue: 2, 108 - 123, 27.05.2020

Md.salamun Rashidin , Sara Javed Dr. Bin Liu

https://doi.org/10.33462/jotaf.518975

Abstract

In Pakistan, agriculture sector currently contributes up to 28 percent to in GDP. Due to the
development of
modern science and technology, rural household source of income is altering. Lots
of research suggested that non-farm income is the main source of income for
rural area. This study investigates the effects of non-farm income on
agriculture productivity in Pakistan. The current research accumulated data
from Pakistan Social and Living Standards Measurement Survey (PSLM) 2014-15.
Pakistan Federal Bauru of Statistics has developed its own sampling frame for
rural and urban areas. Researcher used the Heckman’s two-step procedure to tackle the
problem of endogeneity and selection bias. The first phase of probit regression
coefficient indicates that
the availability of banks,
motorable roads, forest, telecommunication substructure, montane grasslands and shrublands
zone are substantial to clarify the non-farm income. On the other hand, the second
stage of OLS regression exhibited a significant negative association between
non-farm income and per-capita farm income.

Keywords

Agricultural Productivity, Non-farm income, Endogeneity

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