Nonfarm employment and poverty in rural El Salvador

This payer analyzes two complementary data sets to study poverty and the nonfarm sector in rural El Salvador. We find that I ural poverty in El Salvador remains acute and significantly higher than in urban areas. While the rural poor are mainly agricultural laborers and marginal farmers, some nonfarm activities are also of importance to the poor. In fact, nonfarm activities in El Salvador account for a significant share of rural employment and income For both the poor and the nonpoor. The poor, on the one hand, are engaged in last resort" nonfarm activities that are not associated with high levels of labor productivity. The nonpoor, on the other, are engaged in productive nonfarm activities which are likely to present a potent force for upward mobility. Significant correlates of these high-productivity occupations include education, infrastructure, location, and gender. While most of the analysis is at the household level, the data also permit some focus oil small-scale rural enterprise activities. It appears that in El Salvador very few rural enterprises report utilizing Formal credit in setting up their activities. In addition, a significant proportion of enterprises are engaged in subcontracting arrangements with some larger, often urban-based, firm. (C) 2001 Elsevier Science Ltd. All rights reserved.