SPATIAL SPILLOVERS AND HOUSEHOLDS’ INVOLVEMENT IN THE NON-FARM SECTOR: EVIDENCE FROM RURAL RWANDA
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Spatial spillovers and households’ involvement in the non-farm sector: evidence from rural Rwanda

 

This paper tests for external effects of local economic activity on non-farm income using survey data from Rwanda. The empirical analysis uses a random sample of 8071 households and a multilevel model to mitigate correlations between individual outcomes and geographical variables. Findings show a positive association between a higher initial local diversity of economic activity and non-farm earnings. Results also point to the importance of access to markets and services indicating that an important part of a household’s capacity to earn non-farm income is associated with factors that are external to the household.

KEYWORDS: Rwanda, non-farm, spatial spillovers, industry diversity, multilevel
 
JEL: O12, R12, R20

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