Abstract
Diverse set of income generating activities may have varying effect on household’s welfare situation. This study intends to assess the extent of different income diversification strategies on rural household welfare. A total sample of 153 households from three districts of Bangladesh was randomly selected. Considering simultaneous causality between different livelihood strategies and welfare indicators, the Two Stage Least Square (2SLS) methods with instrumental variable was applied to estimate impact of the strategies on household welfare. Household per capita expenditure was treated as the welfare indicator which includes both food and non-food expenditures. The findings show that involving in any type of non-farm activities jointly with farming has a significantly positive effect on the household’s welfare. Among different non-farm activities, participation in wage employment and migration along with agricultural activities ensured significantly higher per capita household expenditure. On the other hand, the impact of currently participation in only agricultural activities on household expenditure is insignificant. Besides, Farm size, higher education and infrastructural facilities also play an important role in improving household’s welfare. Therefore, policy should be directed to create opportunities to participate in non-farm activities through establishment of small and medium industries, especially agro-based industries in the rural areas.
 J. Bangladesh Agril. Univ. 17(1): 73–79, March 2019
Highlights
Diverse set of income generating activities may have varying effect on household’s welfare situation
Though it is expected that farm households’ participation in nonfarm activities in Bangladesh would very likely to have a significant effect on household’s food consumption and non-food expenditure like other developing countries, existing research has not yet focus on all of these issues in Bangladesh. Due to filling this gap, this study examined the impact of income diversification on the welfare of rural households in Bangladesh
Results show the need for non-farm employment opportunities, as income from a combination of farming and various form of non-farm activities influenced welfare positively compare to only agricultural activities
Summary
Diverse set of income generating activities may have varying effect on household’s welfare situation. Though it is expected that farm households’ participation in nonfarm activities in Bangladesh would very likely to have a significant effect on household’s food consumption and non-food expenditure ( their welfare) like other developing countries, existing research has not yet focus on all of these issues in Bangladesh. Due to filling this gap, this study examined the impact of income diversification on the welfare of rural households in Bangladesh. The form of structural equations was used in this study for better understanding the causal linkages between components of different strategies and household welfare
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