New evidence regarding the effects of contract farming on agricultural labor use

Contractual agreements between smallholder farmers and agribusiness companies have gained in importance many developing countries. While productivity income effects of contracting the small farm sector were analyzed previous studies, labor market employment are not yet well understood. This is an important research gap, especially against background continued population growth structural transformation. Here, we investigate two types contractual large international processing on agricultural use, household allocation, hired demand Ghana's palm oil sector. We use cross-sectional survey data a willingness-to-pay approach to control for unobserved heterogeneity with without contracts. find that intensity substantially reduced through contracts, because Ghana associated adoption labor-saving procedures technologies. Simple marketing contracts lead reallocation saved off-farm employment, whereas resource-providing stronger within farming enterprise. Household more affected by savings than labor.