MARKET IMPERFECTIONS AND CLASS STRUCTURE: THE CASE OF SOUTH AFRICA

Land and market imperfections shape the organization of agricultural production and lead to differentproduction regimes within rural farm households in South Africa. This paper presents a theoretical modelto explain the presence of three main households groups (classes) determined on the basis of the laborregime adopted: small peasants (working both on and off farm), self cultivators (autarkic in labor) andhiring in households. Membership in the three categories is determined by the endogenous shadow wageand the effective market wages. A generalized ordered logit model is used to test the main predictions ofthe model. Market imperfections, which prevent household from accessing markets, are expected to havedifferent impacts on heterogenous households; in this study, a Brant test on coefficient constancy helpsto identify the household specific factors affecting market participation.