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

The issue of labour productivity and the differential between countries and sectors is well established in the literature. The literature finds a wide gap in labour productivity between sectors, but there is limited empirical evidence for rural Nigeria. This paper examined the nature of labour productivity in rural Nigeria using Nigeria’s national data and a regression-based decomposition technique. Overall, the paper found that labour use in the farm sector was 17% less productive than labour in the nonfarm sector. From the regression results, factors such as years of schooling, age as a measure of experience, household size, land size, access to social infrastructure and urbanization, and technical change contributed to driving the labour productivity gap in rural Nigeria. From the results, education, social capital, and infrastructure matter for labour productivity and earnings convergence between farm and nonfarm sectors. Rural development programmes addressing these problems will significantly contribute to a better business environment to increase labour productivity.