The Impact of Off-farm Activities on Rural Household Income in Wolaita Zone, Southern Ethiopia
Journal of World Economic Research
Volume 8, Issue 1, June 2019, Pages: 8-16
Received: Apr. 24, 2019;
Accepted: Jun. 2, 2019;
Published: Jun. 12, 2019
Views 199 Downloads 56
Ayana Anteneh Astatike, Department of Economics, Wolaita Sodo University, Wolaita Sodo, Ethiopia
Ermias Ganamo Gazuma, Department of Economics, Wolaita Sodo University, Wolaita Sodo, Ethiopia
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.
Ayana Anteneh Astatike,
Ermias Ganamo Gazuma,
The Impact of Off-farm Activities on Rural Household Income in Wolaita Zone, Southern Ethiopia, Journal of World Economic Research.
Vol. 8, No. 1,
2019, pp. 8-16.
CSA. (2013). National Labor Force Survey Report, Central Statistical Agency of Ethiopia; Addis Ababa, Ethiopia.
Haggblade, S., Hazell, P. & Reardon, T. (2010). The Rural Non-farm Economy: Prospects for Growth and Poverty Reduction. World Development Vol. 38, No. 10, pp. 1429–1441, Elsevier Ltd.
Janowski, M. & Bleahu, A. (2002). Factors affecting household-level involvement in rural non-farm economic activities in two communities in Dolj and Brasov judete, Romania. Paper presented at the workshop Rural Non-farm Employment and Development in Transition Economies, 6-7 March 2002, University of Greenwich, London.
Nagler, P., & Naudé, W. (2013). Non-farm entrepreneurship in rural Africa: Patterns and determinants of income diversification.
Ogbonna Chinwe, A. (2015). Determinants and impacts of off-farm participation and support systems on the overall income of the rural farmers: A case study of Umuawa, Abia State, Nigeria. Master’s dissertation submitted in partial fulfillment of the requirements for the degree of Master of Science in Nutrition and Rural Development.
Barrett, C. B, Reardon, T. & Webb, P. (2001). Non-farm Income Diversification and Household Livelihood Strategies in Rural Africa: Concepts, Dynamics, and Policy Implications, Food Policy. 26 (2): 315-331.
Haggblade, S., Hazell, P. & Reardon, T. (2007). Transforming the rural nonfarm economy: opportunities and threats in the developing world. The Johns Hopkins University Press: Baltimore.
Zhu, N. and Luo, X. (2005). Impacts of Non-farm Income on Inequality and Poverty: The Case of Rural China. Manuscript.
Davis, J. & Pearce, D. (2001). The Non-Agricultural Rural Sector in Central and Eastern Europe. Department for International Development (DFID)/World Bank. Collaborative Program for Rural Development. Natural Resources Institute Report No. 2630.
Davis, J. R. (2003). The rural non-farm economy, livelihoods and their diversification: Issues and options; natural resources institute (NRI) Report No: 275. Available online at https://core.ac.uk/download/pdf/42389803.pdf.
O'Brien, M., & Hennessy, T. (2008). An examination of the contribution of off-farm income to the viability and sustainability of farm households and the productivity of farm businesses.
Bayissa, F. W. (2010). Does off-farm income compete with farm income? Evidence from Malawi; Master Thesis.
Holden, S., Shiferaw, B., & Pender, J. (2004). Non-farm income, household welfare and sustainable land management in the less favored area in the Ethiopian highlands. Food Policy, 29, 369–392.
Wolaita Zone (2015). Annual Socio-economic and Demographic Reports. Development Data Collection and Dissemination Core Process, Finance Bureau of Wolaita Zone.
Heckman, J. (1979). Sample Selection Bias as a Specification Error. Econometrica, vol. 47 (1) 153-162.
Bushway, S., Johnson, B. D. & Slocum, L. A. (2007). Is the Magic Still There? The Use of the Heckman; J Quant Criminol 23: pp. 151–178.
Zaman, H. (2001). Assessing the Impact of Micro-credit on Poverty and Vulnerability in Bangladesh; A case study of BRAC; Office of the Chief Economist and Senior Vice-President (DECVP). The World Bank.
Greene, W. H. (2003). Econometric Analysis. Fifth edition New York University Pearson Education, Inc., publishing at Prentice Hall.
Wooldridge, J. (2009). Introductory to econometrics, modern approach, Michigan State University. 4th edition South-Western, a part of Cengage Learning.
Fernandez, C. J., Mishra, A., Nehring, R., Hendricks, C., (2007). Off-farm income, technology adoption, and farm economic performance. United States Department of Agriculture. Economic Research Report Number 36.
Nehring, R. & Fernandez, C. J. (2005). The Impacts of Off-Farm Income on Farm Efficiency, Scale and Profitability for Corn Farms. Economic Research Service USDA, Washington.
Bachewe, F., Berhane, G., Minten, B. & Taffesse, A. S. (2016). Off-farm income and labor markets in rural Ethiopia. ESSP Working Paper 90, Addis Ababa.
Reardon, T., Stamoulis, K., & Pingali, P. (2007). Rural Nonfarm Employment in Developing Countries in an Era of Globalization. Agricultural Economics, 37, 0, 173-183.
Osondu, C. K., Obike, K. C., & Ogbonna, S. (2014). Determinants of decision to non-farm Entrepreneurship by women farmers in IkwuanoIga of Abia State. European Journal of Agriculture and Forestry Research; Vol. 2, No. 4, Pp. 41-52.
Sanusi, W. A, Dipeolu, A. O, & Momoh, S. (2016). Determinants of Participation in Non-Farm Activities among Rural Households in Osun State- An Application of Multinomial Logit Model. International Journal of African and Asian Studies. Vol. 25. ISSN 2409-6938.
Beyene, A. (2008). Determinants of off-farm participation decision of farm households in Ethiopia. Agrekon 47 (1): 140-161.
Yishak Gecho (2017). Rural Farm Households’ Income Diversification: The Case of Wolaita Zone, Southern Ethiopia. Social Sciences. Vol. 6, No. 2, 2017, pp. 45-56.
Osarfo, D., Senadza, B. & Nketiah-Amponsah, E. (2016). The Impact of Nonfarm Activities on Rural Farm Household Income and Food Security in the Upper East and Upper West Regions of Ghana. Theoretical Economics Letters, 6, 388-400. Available online at http://dx.doi.org/10.4236/tel.2016.63043.
Danquah, M. & Iddrisu, A. M. (2018). Access to mobile phones and the wellbeing of non-farm enterprise households: Evidence from Ghana. Vol. 54. 1-9. Article in Technology in Society.
Babatunde, R. O., Olagunju, F. I., Fakayode, S. B. & Adejobi, A. O. (2010). Determinants of Participation in Off-farm Employment among Small-holder Farming Households in Kwara State, Nigeria. PAT December 2010; 6 (2): 1-14 ISSN: 0794-5213.
Babatunde, R. O. (2016). Impact of Off-farm Income Diversification on Agricultural Production and Efficiency of Smallholder Crop Farmers in Rural Nigeria. 11th African Economic Conference (AEC), December 5-7, Transcorp Hilton Hotel, Abuja, Nigeria.