Abstract
The study examined income diversification, inequality and poverty among rural households in Oyo state, Nigeria. Cross-section data were generated from the survey conducted on a sample of 200 households with the aid of structured questionnaire using multi-stage sampling procedure. Descriptive statistics, diversification index, Gini coefficient, FGT poverty index, and the Probit regression model were used to analyze data. Mean income diversification index of 1.22 shows that majority of the respondents had multiple streams of income but crop farming had the largest share (90%) in total income. Mean income of respondents was ₦77,613.2±83575.01, and Gini coefficient of 0.48, 0.46, and 0.39 were obtained for total income, nonagricultural income, and agricultural income respectively. The poverty line was ₦6,490.50 and mean per capita expenditure was ₦9,735.74. The head count ratio showed that 53.5% of the households were poor while 46.5% were regarded as non-poor, and poverty gap was 0.214. From probit results, age, secondary occupation, and farm size had significant inverse relationship with poverty status. Having primary and secondary income sources is poverty reducing, therefore, rural households should be encouraged to remain in farming, especially crop farming, and motivated through skill acquisition to diversify into other income generating activities.
Highlights
Poverty is lack of job, hunger, poor health, low education, low self-esteem, lack of adequate housing, lack of land, low economic status, and inability to clothe oneself and family (Adigun et al, 2011)
The broad objective of this study is to examine income inequality and the effect of income diversification on poverty status of rural households in Oyo state
Rural households diversified from agricultural livelihood activities to non-agricultural activities
Summary
Poverty is lack of job, hunger, poor health, low education, low self-esteem, lack of adequate housing, lack of land, low economic status, and inability to clothe oneself and family (Adigun et al, 2011). Poverty creates disillusionment about morality as it makes people compromise on moral values or abandon moral values completely. Okafor (2004) affirmed that the success or failure of any government is measured by the degree of attainment of human development or the level of poverty prevalent among the people. The notions of income distribution have been a subject of immense concern to economists for a long time. This is because high level of income inequality produces an unfavorable environment for economic growth and development (British Council, 2012). Previous studies have shown that income inequality has risen in many developing countries in the last two decades, leading to pockets of poverty situation across the world (Clarke et al, 2003). In Nigeria, though there has been multiplicity of programs and projects with poverty reduction mandate implemented over the years, it appears they were tinkering at the edges rather than the root causes of poverty since its incidence and severity had continued to deepen (Nwachukwu and Ezeh, 2007)
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