Do Households in Malawi Use Labor Efficiently? Policy Brief No. 8

This paper explores whether households in Malawi are allocating their labor optimally between farm and non-farm activities

• From: Foreign, Commonwealth & Development Office
• Published: 9 September 2016

• Country: Malawi
• Document Type: Briefing
• Theme: Economic Growth
• Authors: Dillon, B, Brummund, P and Merfeld, J

Abstract

This paper explores whether households in Malawi are allocating their labor optimally between farm and non-farm activities. If households are not, they could theoretically increase their incomes by changing how they allocate their time, which would suggest that some force – excessive risk, lack of information, incomplete markets – was preventing them from optimizing. Using LSMS-ISA data for Malawi for years 2010 and 2013, we find that we cannot reject the null hypothesis that households are allocating their time efficiently. This suggests that if policymakers concentrate on raising productivity and the returns to labor in the most cost-effective way possible, households will respond by efficiently reallocating labor between activities.

This research is part of the Gender, Growth and Labour Markets in Low-Income Countries programme

Citation

Dillon, B., Brummund, P. & Merfeld, J. (2016). Do Households in Malawi Use Labor Efficiently? GLMLIC Policy Brief No. 8. Available at: https://g2lm-lic.iza.org/publications/pb/pb8/

Link

Do Households in Malawi Use Labor Efficiently?

Published 9 September 2016