Health Shocks and Agricultural Production: Evidence from Ghana

Abstract

Agriculture continues to be the foundation to economic growth, poverty reduction and rural livelihoods improvement for many countries. The success of agriculture particularly in developing countries however depends on the availability and quality of the labour force which unfortunately is hampered greatly by poor health and diseases. From a macroeconomic perspective, health shock morbidity affects household productivity by reducing the number, capacity and efficiency of the labour force. This link between agriculture productivity and health shock has received some considerable research interest in the economics literature, albeit theoretical and conceptual, with limited empirical attempts. For policies to affect the link between health and productivity, more empirical information is required on the relative importance of the pathways through which health shocks affect productivity. While normatively, the impact of health shocks on productivity appears unambiguous; both micro- and macro-level studies do not provide clear-cut evidence that support this. Using a two-wave panel data we estimate this important linkage by analysing the effects of idiosyncratic health shocks on labour allocation, use of other inputs and value of agricultural output in Ghana. The results show that family labour used for land preparation and farm management, in particular are very sensitive to ill-health. Households are only able to substitute lost family labour employed at the farm management stage but we do not find that substituted labour completely replaces the healthy family labour which is lost to ill health. The effects on agricultural investments are also negative and highly significant as households are generally not able to ameliorate the effects.