The effect of health shocks on agricultural productivity: Evidence from Ghana

Abstract

While agriculture remains the major source of livelihood for rural households in many countries in the developing world, agriculture output continues to depend on the availability and quality of the labour force which unfortunately is hampered by health shocks and diseases. Reviewing the empirical literature, it appears however, that both micro- and macro-level studies have not provided clear evidence to show the linkage, due largely to methodological issues. The purpose of this study is to estimate the impact of idiosyncratic health shocks on farm labour use at all the stages of farming activities, use of non-labour inputs and on the end value of agricultural output. Using a two-wave panel data, our results show that family labour used in land preparation and farm management are very sensitive to ill-health. Households are only able to substitute lost family labour at the farm management stage. Substituted labour however does not completely replace the lost family labour. The effect on agricultural investments is also negative. We argue that preventive healthcare interventions intended to reduce the consequences of ill-health on agriculture must target the different stages of the agriculture process. More lasting health policies such as health insurance that reduces out-of-pocket payments would be an authentic option in reducing the effect of healthcare expenditures on agriculture investment.