Rural household composition and labor demand in the labor market: The case of office du Niger at Mali

The agricultural sector in developing countries is characterized by the persistence of low productivity, low capital-intensive agriculture, dominated by smallholder agriculture exposed to imperfect markets. However, the aim of the study, is to test the non-separability hypothesis of household production and consumption decisions while examining the socio-economic activities of households, and to analyze the effect of credit constraint on the productivity and technical efficiency of households in the Office du Niger region in the Republic of Mali. The sample size in the study was determined by stratified random sampling method. According to the sampling method used, the sample obtened was 400 producers, and the data were obtained by conducting a household survey. A multinomial model was applied to identify the work or rationing regime in which the household chose to participate and then Ordinary Least Squarres (OLS) and Two-Stage Least Squares (2SLS) regression analysis was used to test the non-separability hypothesis. Switching regression was used to determine the impact of credit constraint on the productivity of constrained and unconstrained households. However, the Stochastic Frontiers Analysis was used to estimate the technical efficiency of constrained and unconstrained producers. In the household's farms examined, household population was calculated as 3,74 persons and the total population was composed at 57,83% males and 42,17% females on average per farm. The active capital was composed by 41,17% of the land capital and 58,83% is working capital. Active capital was composed at 33,46% of the the tool and machinery capital, 30,28% of the building capital, 19,34% of animal capital, 1,84% of the land improvement capital, 1,17% of the plant capital, 7,88% of the land capital, 4,92% of the money capital, 1,11% of the material and ammunition capital. Passive capital was composed of 6,44% of foreign capital and 93,56% of domestic capital on average per farm. The economic and financial profitability ratios were calculated as 4,31% and 4,49%, respectively. The using of Ordinary Least Squarres and Two-Stage Least Squares method all showed that only demographic variables influence household labour demand, hence the non-separability hypothesis. This study suggests that the composition of the household is determined simultaneously with the workforce. This illustrates the non-separability hypothesis between production and consumption decisions. However, the switching regression results showed that removing credit constraints will increase the productivity of constrained households by 12,72%. The Stochastic Frontiers Analysis results revealed a technical efficiency difference of 49,56% between constrained and unconstrained households. To reduce the credit constraint and boost the production level, policymakers should revise cadastral laws allowing farmers to use their land as collateral when applying for loans.