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Microeconomic Analysis Of Rural Nonfarm Activities In The Kyrgyz Republic: What Determines Participation And Returns?

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Executive Summary

This paper uses two representative household budget surveys from the Kyrgyz Republic to analyze factors influencing participation and returns from different types of nonfarm activities in 2005 and 2006. Nonfarm activities are found to be most important for the poor, who are pushed out of agriculture due to limited and poor land resources. The authors also show that different nonfarm activities have different human capital requirements. Unlike other studies, they use the double hurdle model which allows them to demonstrate that a number of variables have different effects on participation and income from nonfarm activities. For example, residing in remote areas and lack of capital are found to stimulate participation in nonfarm activities, but decrease nonfarm income.

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