Impact of Livelihood Diversification on Rural Households’ Income: The Case of Gamo Zone, Southern, Ethiopia

Wanno Wallole Wabara

doi:10.7176/jesd/11-23-02

Abstract

Livelihood diversification strategy is playing an important role to generate rural household’s income. This study focused on the impact of livelihood diversification on rural household’s income in Kamba and Arbaminch Zuria woreda in Gamo Zone, Southern Ethiopia. The study is conducted by using a cross-sectional research approach. This study employed multi-stage random sampling technique, a sample size of 400 household individuals from 6 sample kebeles were selected. Inferential statistics wereused to examine the impact of livelihood diversification on households’ income by using propensity score matching model (PSM).The econometric analysis result demonstrated thatout of 10 hypothesized explanatory variables, 6 variables which are age, sex, and religious, education in year, extension service and access to market were found to have significant impact on livelihood diversification.Age and Religious influenced the probability of participation in diversification positively and significantly at 5% level. Whereas the education in year were determined the participation of diversification positively and significantly at (p<0.001). And sex affected participation negatively at 10% significance level. On the other hand Extension Service and Access to Market affected participation negatively at 1% and 5% significance level, consecutively. Therefore, the findings of this imply that rural households’ development policies should consider livelihood diversification is the right way to improvethe rural household’s income. Keywords: Livelihood; Diversification; income; PSM; Ethiopia. DOI: 10.7176/JESD/11-23-02 Publication date: December 31 st 2020

Highlights

Livelihood diversification is one of the most remarkable characteristics of rural livelihood strategy
To examine this study score marching model was used. Owing to this model of examination, the Propensity score matching (PSM) framework has been adopted for estimating the impact of livelihood diversification on household income
Impact through this outcome variable has been obtained by matching an ideal comparative group to the treatment group on the basis of propensity scores (Pscores) of X

Summary

Introduction

Livelihood diversification is one of the most remarkable characteristics of rural livelihood strategy. It is a process of building rural households’ capital by pursuing different group of activities to advance their standard of living (Ellis, 1998). According to Barrett et al, (2001), diversification can be measured by using activities, income and assets. Households use both productive assets, mainly land and human capital, and unproductive assets such as household items and property and engage in various activities to generate income. Assets, activities, and income can serve as complementary indicators of diversification (Barrett et al, 2001; Zerihun, 2017)

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