Final Dissertation for Edeoba Edobor - Word
Creators: name: Edobor, Edeoba William
Publisher: name: Purdue University Graduate School
Year: 2022
Subjects: Agricultural economics

description: This dissertation consists of three essays that examine the response of small businesses to disruptions in their environment. The first two essays focused on small non-farm businesses in the United States and how they deal with natural disasters. The last essay examined smallholder farm households in Malawi, and how their household labor allocation decisions are affected by land allocation to estates in their communities. The individual essays are summarized as follows: Essay 1: <em>A Conditional Process Approach to Understanding the Role of Adjustment Strategies and Disaster Experience in Racial Disparities in Small Business Performance. </em>Considering that most minority owned businesses have limited access to formal systems, this essay explored how race could indirectly affect business performance (measured as percentage revenue growth) through the adoption of three informal strategies: customer base expansion, supplier base expansion and family adjustment strategies. It also explored whether these indirect effects are moderated by experience with natural disaster. The results showed that being a racial minority was positively associated with revenue growth such that on average, minority business owners experienced 29% higher revenue growth than white-owned businesses (p&lt;0.05) on business performance. It also showed a modest indirect effect of race on revenue growth through each mediating strategy (p&lt;0.5). However, the results did not support a moderating role for disaster experience. Essay 2: <em>Willingness to Pay for Comprehensive Cyclone Insurance Coverage by Small Business Owners: Evidence from the Coastal States of the United States</em>. Small businesses in the coastal United States are usually uninsured or underinsured for cyclone events. The underinsuring of these businesses could be a result of limited insurance coverage as well as individual characteristics of small business owners. Using a discrete choice experiment, this essay used a hypothetical comprehensive cyclone insurance to understand what insurance attributes are important to small business owners. It also examined the role of previous disaster experience, charity hazard as well as temporal orientation on the willingness to pay for the disaster insurance. This study used a discrete choice experiment to elicit insurance preferences from small coastal businesses which employed less than 100 employees. A mixed logit model was used to analyze the data. The results showed that business owners exhibited positive marginal utilities from policies that covered flood, windstorm, and business interruption regardless of the combination. Notably, the mixed logit model showed that on average, business owners were willing to pay up to 450%, 472%, and 482% more than their total monthly business insurance premium payment for insurance that covers flood and business interruption, windstorm and business interruption, and flood, windstorm and business interruption respectively. Ordinary Least Squares (OLS) regression showed that respondents who had previously experienced cyclones were more willing to pay for the presented insurance policies than those who have not. Future orientation was also found to be positively associated with the marginal willingness to pay for the insurance policies. Essay 3: <em>Estates and Small-Holder Agricultural Labor Dynamics in Sub-Saharan Africa:</em> <em>A Case Study of Malawi. </em>Estates are larger than the average farm holdings, which mostly grow one crop, require large capital investment, are centrally managed and rely a lot on hired labor. With such large investments in agricultural land, the labor decisions of smallholder households in Africa will likely be altered. This essay therefore examined the role of estate farms on smallholders’ allocation of labor between on-farm, and off-farm demand and supply of casual labor using the <em>ganyu</em> system of Malawi as a case-study. Using the Malawi Integrated Household Panel survey covering the years 2010, 2013, 2016, and 2019, we estimated the effect of estates on the participation of smallholders on these labor decisions as well as the number of days spent in each activity. We also investigated the effect of these estates on community agricultural labor (<em>ganyu) </em>wage rates and the share of income accruable to ganyu and crop production. Linear probability (LPM), as well as tobit-correlated random effects (CRE) regressions were used to test these effects. Both models showed that the share of estates had a negative correlation with <em>ganyu </em>demand. The Tobit CRE regression showed that on average a 1% increase in the percentage share of agricultural land occupied by estates was associated with a modest 0.04% (p&lt;0.01) decrease in the number of days <em>ganyu </em>labor was demanded, and a 0.02% increase in the number of days household members spent on their own farms. Further results showed that households in communities with higher shares of estates participated in less non-crop farming activities especially wage employment. We also found that the negative relationship between estates and <em>ganyu </em>demand was accentuated among households with higher levels of assets, and farm income. Finally, we found a modest negative relationship between share of estates and community <em>ganyu </em>wage rates