Participation in Off-Farm Employment, Rainfall Patterns, and Rate of Time Preferences: The Case of Ethiopia

Devoting time to off-farm activities, while complementing agricultural incomes, may be constrained by labor availability and financial capacity. This paper assesses the importance of rainfall patterns, which condition the availability of agricultural labor, and financial constraints on off-farm employment decisions. Using panel data from Ethiopia, which include experimental rate-of-time preference measures, we found that these and rainfall are significant determinants off-farm employment. Rural development policies should take into account the financial capacity of households and the role of off-farm opportunities as safety nets in the face of weather uncertainty.