Ramifications of Households Non-Farm Income on Agricultural Productivity: Evidence From Rural Area of Pakistan

Abstract

In Pakistan, agriculture sector currentlycontributesup to 28 percent to in GDP. Due tothe development ofmodern scienceand technology, rural household source of income is altering. Lots of research suggested that non-farm income is the main source of income for rural area. This study investigates the effects of non-farm income on agriculture productivity in Pakistan. The current research accumulated data from Pakistan Social and Living Standards Measurement Survey (PSLM) 2014-15. Pakistan Federal Bauru of Statistics has developed its own sampling frame for rural and urban areas. Researcher used the Heckman’s two-step procedure to tackle the problem of endogeneity and selection bias. The first phase of probit regression coefficient indicatesthatthe availability of banks, motorable roads, forest, telecommunication substructure, montane grasslands and shrublands zone are substantial to clarify the non-farm income. On the other hand, the second stage of OLS regression exhibited a significant negative association between non-farm income and per-capitafarm income.