Determinants of Rural Labor Market Participation in Tanzania

by John K. Mduma and Peter Wobst

Abstract

Participation in rural off-farm activities (outside a household’s own farm) is one of the livelihood strategies among poor rural households in many developing countries.  One component of off-farm activities accessible to the very poor is wage labor because it does not require any complementary physical capital.  A household’s ability to participate in the rural labor market depends on the characteristics of the household itself and the local labor markets conditions. This study examines the factors that determine the number of households supplying labor to a particular rural local labor market in rural areas of Tanzania and the share of labor income in total cash income.  The study finds that education level, availability of land, and access to economic centers and credit are the most important factors in determining the number of households that participate in a particular rural local labor market and the share of labor income in total cash income.

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John K. Mduma is a lecturer of Economics at the Economics Department, University of Dar es Salaam & Junior Research Fellow at the Center for Development Research (ZEF), University of Bonn.

Peter Wobst is is a Senior Research Fellow at ZEF & Research Fellow at the International Food Policy Research Institute (IFPRI), Washington, D.C.  The research was made possible by the Robert Bosch Foundation under the Policy Analysis for Sustainable Agricultural Development (PASAD) Project at ZEF.