Household Labour Productivity Gap in Rural Nigeria: Farm versus Non-Farm

The issue of labour productivity and the differentialbetween countries and sectors is well established in theliterature. The literature finds a wide gap in labourproductivity between sectors, but there is limited empiricalevidence for rural Nigeria. This paper examined the natureof labour productivity in rural Nigeria using Nigeria’snational data and a regression-based decompositiontechnique. Overall, the paper found that labour use in thefarm sector was 17% less productive than labour in thenonfarm sector. From the regression results, factors suchas years of schooling, age as a measure of experience,household size, land size, access to social infrastructureand urbanization, and technical change contributed todriving the labour productivity gap in rural Nigeria. Fromthe results, education, social capital, and infrastructurematter for labour productivity and earnings convergencebetween farm and nonfarm sectors. Rural developmentprogrammes addressing these problems will significantlycontribute to a better business environment to increaselabour productivity.