Sustainable sourcing from developing countries: a case-study on horticulture export chains.

The agri-food sector in developing countries has been transforming rapidly during the last decades, leading to a more consolidated and vertically integrated agro-industry. Labour market effects are especially pronounced in high-value export sectors. Whether this transformation in the agri-food sector and the associated employment creation benefits rural households in developing countries remains a highly debated issue. While some argue that the economic impact of employment is limited due to inferior working conditions, others demonstrate that employment in high-value export sectors can lead to upwards income mobility and poverty reduction but empirical evidence is very scarce. This dissertation aims to fill this research gap by unravelling the links between global food value chains, employment creation and rural development. I focus on the Saint-Louis region in Senegal, a rural area where investments from horticultural export companies have created many off-farm employment opportunities since 2000s, especially for women.

In chapter two I investigate the impact of wage employment on households’ income. I differentiate between employment in the horticultural export industry and employment in other sectors. I use household survey data from two panel rounds in 2006 and 2013 and apply quantile regressions to address unobserved heterogeneity and estimate heterogeneous effects. I demonstrate that employment in the horticultural export sector increases income per capita of the 50% poorest households with 31 to 57%, while employment in other sectors increases income per capita of both poor and non-poor households with 82%. Although employment in other sectors is more remunerative, employment in the horticultural sector is more inclusive, as it employs both poor and non-poor households.

In chapter three I analyse the impact of women’s participation in the labour market on fertility rates. Using household- and individual-level survey data I show that employed women have a significantly higher age at marriage and at first childbirth, and significantly fewer children. As causal identification strategy I use instrumental variable and difference-in-differences estimations, combined with propensity score matching. I find that female employment reduces the number of children per woman by 25%, and that this fertility-reducing effect is as large for poor as for non-poor women and larger for illiterate than for literate women. Results imply that female employment is a strong instrument for empowering rural women, reducing fertility rates and accelerating the demographic transition in poor countries.

In chapter four I investigate the impact of female wage employment on women’s subjective wellbeing. I use household- and individual-level survey data and an instrumental variable approach. I find that female employment improves subjective wellbeing for the poorest women but not necessarily for women whose household income has moved well beyond the poverty threshold. Female employment improves women´s happiness through an income effect, as female employment leads to higher income levels and improved living standards, but the non-income effects of female employment reduce women’s happiness. This negative effect is related to a higher workload, low job satisfaction and changing gender roles.

In chapter five I analyze contractual preferences of female workers in the horticultural export sector. I use a discrete choice experiment to assess women’s preferences for a labour contract and employ a latent class model to capture preference heterogeneity. I find that women have a high willingness to accept a labour contract in the horticultural export industry and that differences in preferences for contract attributes can be explained by women’s empowerment status. More empowered women prefer flexible, seasonal contracts that include job tasks in the conditioning centres and that provide pick-up service. Less empowered women prefer labour contracts that offer company services, especially health care and training, and to a lesser extent pick-up service.

Overall, this dissertation shows that development of global food value chains can benefit rural households in developing countries through employment creation. Policy implications entail that investments from the horticultural export industry can contribute to a pro-poor economic growth. However, to ensure long-term welfare benefits of employment, working conditions should improve by increasing wages and employment duration. Specific policies on women’s empowerment should take the increase in female wage employment opportunities into account, e.g. through family planning programs that target employed women who have low-fertility preferences.