Impact of Rural Out-Migration on Technical Efficiency of Wheat and Teff Producers in Southern Ethiopia

Abstract This study examined the impact of rural out-migration on the technical efficiency of producers using the new economics labor migration theory as a theoretical framework, and the multinomial endogenous switching regression as an analytical framework. Primary data were gathered from a random sample of 415 rural households in southern Ethiopia. Descriptive results showed that most of the migrants are young, better educated, unmarried, and male migrants. The mean technical efficiency of wheat and teff are 83 and 66 percent respectively. The average treatment effect on treated and untreated are − 5.51 and − 4.14 respectively for teff producers, and significant at 1 percent. The base heterogeneities for participation in rural-urban migration are 4.10 and 3.09 for wheat and teff producers respectively whereas the base heterogeneities for participation in international migration are 12.85 and 14.24 for wheat and teff producers respectively. Besides, the base heterogeneities for non-participation in international migration are 14.6 and 21.25 for wheat and teff producers respectively. Hence, rural out-migration significantly reduces crop technical efficiency, and the finding supports the lost labor hypothesis of the new economics labor migration theory. Promoting productivity, off-farm activity, and provision of public goods would reduce labor out-migration in southern Ethiopia.