Rural nonfarm activities and poverty in the Brazilian northeast

This paper combines two complementary data sets to present a disaggregated spatial profile of poverty in the Brazilian Northeast, and to investigate t he importance of nonagricultural activities for its rural dwellers. We pres ent both univariate and multivariate profiles of nonagricultural employment and discuss its determinants. While the main occupational difference betwe en the rural poor and the rural nonpoor in Brazil seems to be the greater r eliance of the former on paid agricultural employment (vis-a-vis own cultiv ation), rather than access to nonagricultural activities, the evidence neve rtheless suggests that diversification into this growing sector provides bo th an important complement to the budgets of the poor. and possibly a self- insurance mechanism against negative shocks. Despite the substantial hetero geneity of the sector, two general findings are robust: returns to educatio n are comparatively high; and location in relation to urban areas is an imp ortant determinant of both employment and earnings in rural nonagricultural activities. (C) 2001 Elsevier Science Ltd. All rights reserved.