Impact evaluation of households participation in agriculture on welfare in Ghana

Abstract

The role of agriculture in Ghana’s economic development cannot be overstated as it is a major contributor to GDP and employs more people in the rural areas thereby improving on their welfare. However, the sector’s performance in recent time has declined as poverty incidence has remained high among rural agriculture households. This study, therefore, examines how participation in agriculture activities impact households’ welfare in Ghana using the seventh edition of Ghana Living Standard Survey (GLSS) dataset conducted in 2016/2017. The Heckman probit model is applied to determine the drivers of households' probability of engaging in agriculture. The propensity scores matching technique is used to match the farming households to their replica non-farming households as counterfactuals to ascertain the welfare impact of the households. The result shows that the welfare of households in agriculture is multidimensionally deprived than non-agriculture households. In addition, factors such as size of household, sex and age of household head, age at first marriage, location, ethnicity, and educational level of household heads have the likelihood of influencing agriculture participation in Ghana. Therefore, by modernising agriculture to enhance value addition through technology, irrigation, financing and marketing to boost agribusinesses would enhance the welfare in the agriculture households.