insignificant throughout. This failure to find impacts of large farms is not surprising for teff where small farmers’ yields already higher commercial ones’. In the case of sorghum, it suggests that, beyond adoption of improved seed, there is little transfer of technology between large and small farms.

# **4.2 Rural labor market participation**

With growing population and limited absorptive capacity in the non-agricultural sector, the ability to create gainful employment is a key concern for policy makers and considerable hopes are being pinned on large farms being integrated into agro-processing value chains. Unfortunately, CSA’s smallholder survey lacks information on households’ off-farm labor supply. To fill this gap, we use individual level data on off-farm labor supply from the 2011/12 and 2013/14 rounds of nationally representative LSMS-ISA surveys. Our two measures are if, over the last 12 months, individuals age 15 and above engaged in paid work or casual (non)-agricultural labor. The bottom panel of table 8 highlights that in both rounds 4% or 5% of sampled individuals engaged in paid work, the share of casual agricultural workers increased from 8% to 16% between the two rounds and only about 1% engaged in casual labor outside agriculture.

To explore if rural dwellers’ proximity to commercial farms affects their labor market participation in ways comparable to those emanating from other employment centers, we compare the impact of individuals’ distance to the next small town, defined as an urban center with at least 2,000 inhabitants, to that of their proximity to commercial farms or total large farm are cultivated in different distance bands. Regressions show that incidence of paid work decreases significantly with distance to towns but not distance to large farms (table 8, col. 1), in line with the notion that large farms fail to significantly contribute to generation of paid jobs.<sup>19</sup> The point estimate suggests that being located 10 km closer to the next town increases the propensity to engage in paid work by some 0.9 percentage points, of almost 20% of the baseline level of 4.8%. We find that, as expected distance to towns does not affect the propensity to take up (agricultural) casual work but neither does distance to large farms (table 8, col. 2 and 3), implying that, even in their immediate vicinity, such farms have no perceptible effect on casual labor demand. Using large farm area cultivated within different distance bands as an independent variable supports the notion of large farms having no impact on local labor markets but, at the same time suggests that large farm area 50-100 km away is associated with higher demand for casual agricultural labor, possibly because temporary or permanent labor is imported. More detailed labor data from large farms that are currently being collected are likely to provide the detail needed for a more definitive answer to this issue.

# **4.3 Resilience to climatic shocks**

> 19 The short time period covered by our panel implies that there is little intertemporal variation in distance to towns. We thus report regressions that include zonal fixed effects in table 8, noting that coefficients on the variables related to distance to farms are virtually unchanged if woredaor household-level fixed effects are included.

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