Determinants of household activity choice, rural income strategies and diversification - Institutional Constraints to Small Farmer Development in Southern Africa - page 65

Table 3.4. OLS estimates of determinants of income by activity type.

Variables Own business Own agriculture Wage labour Remittances

Coefficient t-ratio Coefficient t-ratio Coefficient t-ratio Coefficient t-ratio

Age -10.664 -0.230 -25.135 -1.793* -264.660 -1.728* 1,450.793 1.965*

Physical capital 1,298.481 1.693* 467.412 -1.659* 17,579.438 0.477 -102.842 -0.249

Social capital 2,090.591 1.883* 326.983 1.737* 3,717.960 0.000 825.318 1.889*

Education 522.634 1.756* -261.028 -1.322 1,434.535 1.678* 1,366.43 1.902*

Gender 662.589 0.555 -308.461 -0.944 -3,244.915 -0.815 -34.639 1.522

Labour -193.724 0.579 128.117 1.302 -489.977 0.443 2,371.173 -0.122

Dependency ratio 515.096 0.179 403.582 -0.495 -22,893.95 -2.20** 144.225 1.002

Land size -202.780 0.460 156.009 1.299 -100.646 0.062 950.083 -0.292

Geographic location 972.958 0.854 174.234 1.675 -4,355.692 1.160 7,719.835 2.733

Constant 1,936.203 1,975.611 24,555.700 -7,719.835

R-square 0.10 0.23 0.36 0.37

* Indicates significance at the 10% level; Number of observations = 79.

Africa. Similar conclusions in these results indicate the need to create and promote social
capital both as a way of improving household income and promoting rural livelihoods.

Location also plays an important role in determining household income by activity group.
Sanchez (2005) found that households in communities located away from urban areas
have own agriculture and remittances as their highest sources of income relative to income
from wage employment and own business. De-Janvry and Sadoulet (2001) found that
geographical location affects household income and specific sources of income. The results
of this study confirm the assertion of Sanchez (2005). Positive coefficients were found for
the community variable in agriculture, remittances, own business and wage income equation
for Ndakana village which is the more rural settlement. The community variable only
reflects a negative coefficient for income in the wage employment equation. This probably
reflects some level of regional comparative advantage in activities across communities based
on their location. Households located next to towns are likely to receive relatively higher
income from employment activities whilst those in rural settlements benefit most from own
agriculture, own business and remittances.