Abstract
Household diversification into nonfarm work activities is a major rural livelihood strategy in many developing economies. In this paper, we explore empirically if rural households in Uganda leverage their nonfarm earnings to overcome credit constraints and invest in high-yielding maize seed varieties. We use a recently developed semiparametric estimator of binary outcomes that also accommodates endogenous regressors straightforwardly to estimate the effect of nonfarm income on technology adoption decisions. Our results show that nonfarm income has a positive and significant effect on adoption of improved maize seed. Specifically, we find that a one standard deviation increase in nonfarm income for the average farmer raises the likelihood of adoption by about 47%. Thus, increased recourse to high yielding crop seeds in Uganda can be enhanced by promoting mechanisms that encourage income diversification in the rural areas.
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