Household Non-Farm Income: Any Influence on Agricultural Productivity in Rural Ghana?

Abstract

This paper analyzes the effect of household non-farm income on agricultural productivity in rural Ghana using a nationwide household survey data. Key features of the analysis are the problem of endogeneity and selection bias which are addressed using the Heckman two-step procedure. The first stage probit regression revealed that the coefficients of availability of telecommunication infrastructure, availability of banks, availability of motorable roads, forest and savannah zones are significant in explaining non-farm income. The second stage OLS regression showed a significantly negative relationship between non-farm income and per-capita farm income given the other control variables.

Keywords: Non-farm income, Productivity, Ghana, Endogeneity and Probit