Supply and demand-side determinants of o®-farm employment in rural Mexico

Income from o®-farm sources is especially important for land-poor households. However, the pattern of participation in o®-farm activities is heterogeneous across space. We explore the determinants of participation in o®-farm employment using data from rural Mexico. In particular, we try to undertand how the neighborhood and the neighbors a®ect the individual decision to participate in o®-farm labor markets. We ̄nd that neighbors' participation in o®-farm non-agricultural employment has a signi c̄ant impact on the individual choice of occupation, even after controlling for availability of opportunities. This ̄nding suggests an important role for networks and referrals in the job-search process of rural households. ¤I would like to thank Sergio de la Vega, Ana Ortiz and Jose Sol¶3s from Progresa in Mexico for their help at di®erent stages of this project. Financial support was provided by the Center of Latin American Studies and the Institute for Business and Economic Research at UC Berkeley. Address: 304 Giannini Hall, University of California, Berkeley CA 94720, [email protected]