COOPERATIVES FOR WHOM? 49
Table 4.1 Reasons not to join the cooperative Reason
Does not think he or she would benefit from the cooperative as it is; fees are too high compared to benefits
Does not meet the requirement for membership; was not accepted or could not pursue membership
Other Source: Authors’ calculations based on data from ESCS (2005).
Percent 58.92 38.86
2.22
we test for the existence of such a relationship using the ESCS (2005) survey. The analysis relies on logit estimates of the probability of membership, using a variety of household characteristics.
In particular, we use landholding as a proxy for a farmer’s production level, as there is clearly a significant relationship between landholding and production. In addition, the relationship between landholding and coopera- tive membership in Ethiopia is probably immune to the problem of reverse causality that would be likely to arise between participation in a cooperative and level of wealth.1
However, such asset measures as number of oxen owned and house value (Table 4.2) may in part be determined by the household’s participation in the cooperative, insofar as participation makes the household wealthier and thus able to purchase more oxen and upgrade its housing. We nevertheless introduce them to assess the robustness of the results obtained in the first specification. Other household characteristics include the age and reading capacities of the household head, as well as a set of regional and ethnicity dummies.
Overall, education and landholding seem to be the dominant variables explaining household participation in cooperatives. Thus the probability that a household participates in a cooperative is increased by 5–8 percent if the household head is literate.2 Participation also increases by 6–9 percent for each additional hectare of land. However, the marginal effect of landholding
1 See Chapter 3 for a discussion of the exogeneity of land allocation in Ethiopia. 2 Overall, the literacy rate approaches 27 percent for nonmembers and 40 percent for members.
If one considers that literacy is somewhat predetermined with regard to participation, and that the effect is not driven by other household (unobservable) characteristics, then education and literacy programs may constitute a powerful tool to promote participation in cooperatives. Test- ing these assumptions would require a more sophisticated estimation of the participation equa- tion, beyond the scope of this chapter.
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