Economic sector matters too for wages. Wages in agriculture are lower than in industry, services, and the public sector. In particular at the higher end of the income distribution (in the 50<sup>th</sup> -90<sup>th</sup> quantiles) workers earn returns 35-56 percent lower than in other sectors.

Social capital is important in the wage determination process in rural Haiti while less so in urban areas. Social capital indicates whether a randomly selected individual (over age 14) from the household is a member of any popular, peasant, women, youth, social, sports, cultural, religious or political organization or club. At the 50<sup>th</sup> and 75<sup>th</sup> quantiles, workers in rural areas obtain returns to social capital of 20 and 24 percent, controlling for other variables. There are no returns to measurable social capital in urban areas and the lower quantiles in rural areas, except for some social capital that our social capital variable did not capture.

# **Farm Technology and Inputs**

Agricultural output has suffered from a growing population farming a finite area of land. On tiny plots, the soil has become progressively less productive. The problem has been compounded by the deforestation of the country, which in turn has led to severe erosion of the fertile topsoil. As yields have declined, Haitian peasants are locked into a self-destructive cycle in which the cutting of trees and the farming of land higher up the mountainside can avoid short term financial disaster, but only create even bigger problems for the agricultural sector as a whole in the long term.

Small farmers lack modern production technology, basic infrastructure to store harvests to take advantage of cyclical price fluctuations, technical assistance to improve productivity, and organized marketing facilities. Family income is therefore highly variable and there is little opportunity for saving. They have very few assets, including education, and are therefore vulnerable to economic and climatic shocks. However, it is not only the poor farmers that lack technologically-enhanced inputs in the production process. Nonpoor farmers in Haiti also lack these inputs in order to increase farm productivity.

The vast majority of land owners have 2 hectares or less. HLCS data reveals that 78 percent of the farmers own 2 hectares or less, 19 percent own 2-7 hectares, and 4 percent own 7 or more hectares (Table 3). Hence, there are also large differences across regions, for example in the Artibonite, North, Northeast, and South regions less than 18 percent of all farms are larger than 2 hectares. Land ownership is spread very thin across farms. It is very difficult to obtain economies of scale with such small land holdings. In Haiti small farm intensification is called for, both in order to increase productivity and reduce poverty.<sup>18</sup> Farmers diversify by producing crops and raising animals. Of the 62 percent of households with access to land, 88 percent cultivate the land and 3.9 percent lease it out.

> 18 Income poverty among the household head of farmers with 0.5 hectares or less reached 64.8 percent and 46.8 percent of household heads with 6-10 hectares of land (See Verner; 2007).

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