IZA DP No. 3403: Does Off-Farm Labor Relax Farmers’ Credit Constraints? Evidence from Longitudinal Data for Vietnam
revised version published in: Agricultural Economics, 2009, 40(2), 177-188
We examine the relationship between participation in non-agricultural labor activities and farming production decisions, focusing on the use of inputs. In particular, we are interested in the hypothesis that income from non-agricultural labor relaxes credit constraints. Using longitudinal data for Vietnam from 1993-98, we find that households participating in non-agricultural labor activities, consistently with our hypothesis, spend significantly more on seeds, services, hired labor and livestock inputs.