Understanding the importance of off-farm employment for rural development: Evidence from Senegal

This paper uses household-level panel data from two survey rounds in Senegal, to estimate the impact of rural off-farm wage employment on household welfare and rural development. Our case-study contains a dynamic off-farm wage employment sector, including agricultural and non-agricultural, casual and yearround employment. We use four welfare indicators, household income, poverty, variability of income, and vulnerability, and two econometric models. Overall, we find that off-farm wage employment increases the welfare of rural households. Our results refute the idea that casual employment is not able to lift the poor and vulnerable out of poverty. In addition, casual and short-term employment decreases the variability of income, which implies an income-smoothing effects for rural households facing downwards shocks and liquidity constraints. We find that when households are casual employed over a longer period of time, they experience a self-employment income growth. This can be due to knowledge spill-over effects, investment effects, or a combination of both. We are carefully positive about the positive impact casual employment can have on rural development. Our results imply that policymakers should take into account agricultural and casual wage employment, as these are accessible for poor households and our results indicate that it can improve their welfare