Abstract
This study presents an empirical analysis of the impact of participation in off-farm activities on household income level in Wolaita zone, southern Ethiopia. The impact of participation in off-farm activities on household income was estimated by using Heckman two-step model. The results of Heckman’s two-step model indicated that participation in off-farm activities has a significant impact on annual income of the households. Moreover, the study identified the factors that affect participation of households in off -farm activities. Consequently, the probit model result revealed that age of the household head, sex of the household head, marital status, distance to the nearest market, agro-ecological zone, credit access, livestock ownership, the amount of farm income, and having mobile phone were key factors that influence participation of households in off-farm activities. With regard to results of Heckman’s two-step model, the participation in off-farm activities, education level of the household head, and agro-ecological zone were found to be the main factors that affect households’ total income level. The positive and significant effect of off-farm activities on total income of the rural households calls for policy measures in order to pave the way to expand off-farm activities so as to bring a substantial contribution to the living standard of the rural society.
Highlights
Agriculture is the backbone of Ethiopian economy contributing about 43 percent of Gross Domestic Product, 70 percent of foreign exchange earnings and 84 percent of the population living in the rural areas and depending on agriculture for livelihood [1]
The results presented in table 4 shows that, among the total twelve explanatory variables included in the probit model, nine variables were found statistically significant factors that affect households’ decision to participate in off-farm activities
The main objective of this study was to examine the impact of participation in off-farm activities on households’ total income in Wolaita Zone, Southern Ethiopia
Summary
Agriculture is the backbone of Ethiopian economy contributing about 43 percent of Gross Domestic Product, 70 percent of foreign exchange earnings and 84 percent of the population living in the rural areas and depending on agriculture for livelihood [1]. The rural livelihoods include income from both farm and off/non-farm sources [2,3,4]. According to [7], off-farm income means off the owner’s own farm that includes wage income in agriculture earned on other people’s farms along with nonfarm earnings from the owner’s non-farm enterprises or from non-farm wage earnings. From this definition, it can be understood that rural non-farm income is smaller than total "off-farm income" by the amount of wage income earned in agriculture other than one’s own farm. For the purpose of this study, the terms “off-farm” and “non-farm” are used interchangeably
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