Several differences exist in the way in which self-employment rural enterprises and wage labor (in its local and migratory forms) impact on rural livelihood strategies. Contrasting the two approaches (see Table 1, below) is thus useful to identify some of the specific attributes of rural enterprises as a pathway to livelihood diversification.
Table 1 - Differences between wage labor and self-employment enterprises as means for livelihood diversification.
|
Self-employment enterprises |
Wage labor |
|
Different kinds of capital assets (human, natural, financial, social and physical) are required. |
Human capital (labor-force, know how, fitness) is the main capital asset invested. |
|
Localized and exposed to the local vulnerability context. |
Highly mobile (migratory) and capable to escape localized negative trends and shocks. |
|
A higher financial risk is taken, in view of a potentially higher (though erratic) return. |
A limited financial risk is taken in order to get a steady and safe income flow. |
|
It often requires cooperation among household members. |
Tends to be an individual activity. |
|
Tends to reinforce the socio-economic cohesion of the household. |
Potential negative impact on household cohesion (in particular if associated with migration). |
|
Generally, it is more consistent with the reproduction of the rural life-style. |
Long-term migratory wage-labor can affect rural cultural identities. |
First, investment of household capital assets needed to start up an enterprise is qualitatively (not just quantitatively) different from that implied by wage labor. Rural enterprises requires often that a full range of household capital assets (land, money labor, access to infrastructure, social relationships, know how) is mobilized. On the other hand, wage labor is based essentially on the mobilization of individual’s human capital (work force and know how), with other type of assets playing a secondary “supportive” role.
Second, self-employment enterprise is highly localized (at home, in the farm or in the community) and therefore highly exposed to the local vulnerability context. On the opposite wage labor is highly mobile. This makes it less prone to local negative contingencies, and, at the same time, capable to fit the lack of economic opportunities widespread in rural areas.
An additional difference between wage labor and enterprise in rural livelihoods concerns the role of risk. Rural enterprises are potentially more profitable than wage labor, but require that a higher capital risk is taken (e.g. Woldehanna and Oskam 2001). Conversely, wage labor does not need major investments, but ensures only a limited (though steady and safe) income. The comparative advantage of wage labor is likely to increase in “bad times”, while, for the same reason, independent enterprises might represent an attractive alternative in “good times”. This may result in a periodical shift from self-employment enterprises to wage labor (or vice versa). Yet, both forms of diversification may also functionally coexist with some family members “subsidizing” the household’s enterprise(s) through remittances, and household enterprise(s) providing migrants with a buffer against unemployment, illness or aging.
The latter consideration suggests that both types of diversification tend to increase the complexity of pre-existing household division of labor, with different individuals contributing to their own and household welfare through different activities according to their skill and preferences. Yet, very often, rural enterprises require that different members of the same household (men, women, and children) contribute to the productive cycle according to their particular skills and aptitudes. On the opposite, wage labor is generally undertaken on an individual basis.
A final important difference between rural enterprise and wage labor relates to the dissimilar social and cultural impact of the two choices. Because of their localized nature and their dependence on household cooperation, rural enterprises are less threatening than wage labor for the social organization of the rural household and its cultural identity. On the other hand wage labor, and in particular migratory wage labor, is often associated with some degree of disruption of household cohesion (e.g. Bryceson 1999: 47). Indeed, displacement may lead to the weakening of family ties and cause conflicts between the values and orientations of the rural household and those acquired by migrants while away from home.
