In order to have a good understanding of the livelihood of the rural poor it is necessary to address their different livelihood strategies. This has crucial importance for policy recommendations. There are at least three types of rural poor livelihood strategies in Argentina: (i) on-farm—agricultural based livelihood—where 15 percent of the total population (16 percent poor) is engaged full time; (ii) off-farm—agricultural and nonagricultural employment and subsidies—where 21 percent of the total population (59 poor) is engaged full time; and (iii) a combination of (i) and (ii) where 65 percent of the total population (53 and 47 percent poor and nonpoor respectively).<sup>3</sup> Unfortunately, no data for poor rural people in Argentina are available on social capital, access to markets and institutions therefore these areas are not included in the analysis.

Findings from this paper show that the poor allocate a lower share of their labor to farm sectors than nonpoor do, but still around 70 percent work in agriculture, and the vast majority of rural workers are engaged in the informal sector. Employment analyses show that women have higher probability than men to participate in rural nonfarm activities and they are not confined to low-return employment. Moreover, involvement in the nonfarm sector is related to education attainment; as it increases so does the likelihood of being employed in the nonfarm sector. Workers living in poorer regions with land access are less likely to be employed in the nonfarm sector. Labor income analyses reveal that labor markets pay lower returns to poorer than to richer women and returns to education are increasing with increased level of completed education and income level. Moreover, employment analyses show that nonfarm income and employment is highly correlated with gender, skills, household size, and education. Finally, agricultural producer income analyses reveal that producers’ income is monotonically increasing with land size and with completed education level, and positively correlated with road access and use of electricity, fertilizer, and irrigation.

The paper is organized as follows. Section 2 presents data and methodologies applied in the following sections. Section 3 addresses the characteristics of rural labor force and Section 4 analyses correlates of farm and nonfarm employment and the likelihood of being employed in the high/low productivity sectors. Section 5 addresses the composition of rural income and Section 6 present the labor income analysis. Section 7 addresses agricultural producer incomes and its determinants. Section 8 concludes. The paper uses the official Argentine statistical classification methods; rural areas are disaggregated into two categories: i) grouped rural areas with under 2,000 inhabitants and ii) dispersed rural areas or open countryside.

# **2. Data and Methodology**

This section presents data sources and methodologies used in this paper to analyze rural labor markets in Argentina.

> 3  Poor households’ assets, social capital, access to markets and services, and existing institutions need to be taken into account in order to achieve sustained poverty reduction.

5