Returns from income strategies in rural Poland

Abstract

In order to stabilize and improve their income situation, rural households are strongly encouraged to diversify their activities both in and outside the agricultural sector. Often, however, this phenomenon takes on only moderate proportions. This article addresses issues of rural households' income diversification in the case of Poland. It investigates returns from rural households' income strategies using propensity score matching methods and extensive datasets spanning 1998-2008. Results suggest that returns from combining farm and off-farm activities were lower than returns from concentrating on farming or on self-employment outside agriculture. This differential is stable over time although returns from diversification have relatively improved after the accession of Poland to the European Union. This is also visible in the fact that since 2006, returns from combining farm and off-farm activities have equalized with returns from relying solely on hired off-farm labour, thus smoothing away the difference observed before the accession. Further, over the analysed period, households pursuing a diversification strategy performed better than those relying solely on unearned income. Finally, in general, incomes in households combining farm and off-farm activities were higher than in those combining offfarm income sources.JEL classifications: D31, O15, Q12.