Determinants of participation in non-farm activities and its effect on household income: An empirical study in Ethiopia

Abstract

Undertaking non-agrarian income-generating activities to reduce overreliance on agriculture, production failures, and income fluctuations is a household-amenable, self-insurance mechanism, which provides employment opportunities and capital investment. This article examines the determinants of participation in non-farm activities and effect on household income. Heckman two-step procedure was used to analyze a three-wave survey data set captured from 3866 households. Crop failures, insufficient intake of food, household consumption expenditure, gender, family size, literacy, health status, farm animals holding, access to credit, total hired labor, cooperative membership and agricultural extension services were factors influencing household involvement in non-farm work. Furthermore, the findings establish that there is a decline in the likelihood of households headed by aged people, who tend to rely on subsistence farming to engage in alternative non-agrarian activities. The results of the analyses support the non-separability hypothesis of non-farm activities and household income; this implies that engaging in non-agricultural activities has a direct positive effect on household income. The omnipresence of non-agrarian income generating activities in agroecoregions requires inclusive rural development policies that focus beyond agriculture based on the recognition of the rural economic heterogeneity.

An Analysis of the Pattern of Farmer’s Income in Gopalganj District: An Empirical Investigation

“…In contrast, family size had a positive and significant effect on non-farm income and farm income had a negative and significant effect on non-farm income. Negloet al [14]examined the determinants of participation in non-farm activities and effect on household income. They used Heckman two-step procedure to analyze a three-wave survey data set collected from 3866 households.…”

Determinants of Transmigrant Households’ Income in Settlement Unit 3 Pagar Banyu, Ulu Talo District, Seluma Regency

“…The availability of off-farm and non-farm jobs at transmigration locations such as grocery stalls, workshops, and laborers can be alternatives to farming. Norfahmi et al (2017), Ma et al (2018), Anteneh Astatike and Ganamo Gazuma (2019), Bjornlund et al (2019), andKomikouma et al (2021) conclude that the higher the allocation of household work on non-agricultural activities, the higher the income earned. According to Anang et al (2020), as part of income diversification, off-farm work has an impact on increasing the income of corn farmers.…”

“…Based on a study conducted by Andajani et al (2010), there is a difference in the income between rice farmer households that allocate capital and labor to off-farm and non-farm activities with rice farmer households that only focus on rice farming activities. Norfahmi et al (2017), Ma et al (2018), Anteneh Astatike and Ganamo Gazuma (2019), Bjornlund et al (2019), andKomikouma et al (2021) said that the increased allocation of working time on non-agricultural activities had an impact on increasing farm household income. Cahyono (2017) also reveals that the choice of off-farm work is largely not motivated by the high economic burden on the family but has also created economic and psychological pressures.…”

Impact of urbanization on the welfare of farm households: Evidence from Adama Rural District in Oromia regional state, Ethiopia

“…This finding can be attributed to the inability of the modern sectors to absorb the surplus labour from rural areas. Additionally, rural households need more productive assets and alternative skills beyond agriculture to engage in non-farm activities or be employed in industrial sectors [ 113 , 158 , 159 ]. Consequently, this demonstrates that the expansion of urban areas hampers the annual consumption expenditure of farming households.…”