Non-Farm Employment and Rural Household’s Consumption Expenditures in Neyshabour county: Propensity Score Matching Approach

Introduction Rural non-farm sector(RNFS) comprises all economic activities –such as manufacturing, transport, commerce, banking, service and so on) in rural areas expect cropping, agriculture, livestock, husbandry, hunting, fishing, and forestry. Various studies have shown that nonfarm activities play an important role in reducing rural poverty and increasing incomes. The present study investigate the effect of non-farm employment on rural household's consumption expenditures in Neyshabour county. Materials and Methods The data is gathered through a questionnaire survey carried out on 380 rural households from four districts in the Neyshabour county between September 2017 to February 2018. The propensity score matching approach (PSM) is used to examine the impact of participation in non-farm activities on household consumption expenditures. The method compares the consumption expenditures of non-farm households with their counterfactual group that did not diversify into such activities, depending only on farm activities. Results and Discussion Results indicated that based on the average treatment effect on the treated (ATET), annual consumption expenditure of the households were engaged in non-farm employment was 1420 thousand Rials more than consumption expenditure of households without these activities. Suggestions The significant increase in consumption expenditures in the non-farm households suggests that nonfarm activities expanded in rural areas. In the study area, this is possible by strengthening existing industrial parks. JEL Classification: C21, D60, J21, R11, R2