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Abstract

This study examines the widely held view that earnings from rural wage employment can help farm households overcome constraints on farm investments. It uses a panel dataset of 359 randomly selected farm households from three resettlement areas in Zimbabwe over the period 1996/97 to 1998/99. It finds no evidence to support the hypothesis that income from rural wage employment contributes towards increasing farm investment for the sampled households, and it attributes this to very low savings rates on rural wage employment income. Further, it finds that levels of farm investment increase with the amount of labor and land used in farm production in the previous year, and for households with male and/or older household heads. It also finds an inverse relation between farm investment and farm capital stocks – evidence that households that had higher levels of farm capital stocks were disinvesting in agriculture over the period studied.

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