Income Diversification and Household Well-Being: A Case Study in Rural Areas of Bangladesh
International Journal of Business and Economics Research
Volume 4, Issue 3, June 2015, Pages: 172-179
Received: Apr. 24, 2015;
Accepted: May 25, 2015;
Published: Jun. 11, 2015
Views 5415 Downloads 241
Naznin Sultana, Department of Economics, University of Rajshahi, Rajshahi, Bangladesh
Md. Elias Hossain, Department of Economics, University of Rajshahi, Rajshahi, Bangladesh
Md. Khairul Islam, Department of Economics, University of Rajshahi, Rajshahi, Bangladesh
Diversification of income is considered as an effective way to increase household wellbeing in the developing countries. However, scant attention has been given on this issue in the context of Bangladesh. Thus, the objective of this study is to present an empirical evidence of the state of income diversification and its impact on households’ wellbeing in the rural areas of Rajshahi district of Bangladesh. To this end a multi-stage random sampling technique is used to select 138 households from the study area. In analyzing the collected data, the Simpson Index of Diversity (SID) is calculated to measure the level of income diversification while household consumption expenditure is used for measuring the level of well-being. Finally, a multiple regression model is employed to determine the factors affecting households’ wellbeing. The findings of the study indicate that the extent of income diversification is very low in the study area and it has positive and significant effect on households’ wellbeing. The obtained results have important policy implications which imply that programs targeted to engage people in other income generating activities would augment their income sources. As measures from the part of the government reducing the rate of interest for private enterprising in the rural sector, development of rural infrastructure and improving information facilities at the rural areas are suggested.
Md. Elias Hossain,
Md. Khairul Islam,
Income Diversification and Household Well-Being: A Case Study in Rural Areas of Bangladesh, International Journal of Business and Economics Research.
Vol. 4, No. 3,
2015, pp. 172-179.
Adugana, L. (2006). The dynamics of income diversification in Ethiopia, www.ideas.repec.org/mab/wpapers/3.html.
Ahmed, and Fausat F. (2012).Income diversification determinants among farming households in Konduga, Borno State, Nigeria, Academic Research International, Vol. 2, No. 2, March 2012.
Barret, C.B., and Reardon, T. (2000). Asset, activity and income diversification among African agriculturalists: some practical issues, www. Ieswise.edu/itc/live/basglooo3a.
Barret, C.B., Reardon, T. and Webb, P. (2001). Non-farm income diversification and household livelihood strategies in rural Africa: Dynamics and policy implications, Food policy, 26 (4), 315-331.
BBS, (2013). Yearbook of Agricultural Statistical of Bangladesh. Bangladesh Bureau of Statistics, Ministry of Planning, Government of the People’s Republic of Bangladesh, Dhaka, Bangladesh.
BBS, (2014). Yearbook of Agricultural Statistical of Bangladesh.Bangladesh Bureau of Statistics, Ministry of Planning, Government of the People’s Republic of Bangladesh, Dhaka, Bangladesh.
Castells, M. and Portes, A. (1989). World underneath: The origins, dynamics and affects of the informal economy.
De Janvry, A. and Sadoulet, E. (2001). Income Strategies among rural Households in Mexico: The role of off-farm activities. World Development Vol. 29, No. 3, pp.467 480.
De janvry, a., m. Fafchamps and e. Sadoulet (1991). Peasant household behavior with missing markets: some paradoxes explained. Economic journal 101: 1400-1417.
Duc, P.T. and Waibel, H. (2009). Diversification, risk management and risk coping strategies: Evidence from rural households in three provinces in Vietnam, proceedings of the German Development Economics conference, Frankfurt a. M. 2009, No. 25.
Elbers, C. and Lanjouw, P. (2001). Intersectoral transfer, growth and inequality in rural Ecuador.World Development, 29(3): 481-496.
Ellis, F. (2000). Rural livelihoods and diversity in developing Countries.Oxford University Press, Oxford.
Ersado, L. (2006). Income Diversification in Zimbabwe: Welfare implications from urban and rural Areas. World Bank Policy Research Working Paper No.3964, July. The World Bank, Washington, DC.
Escobal, J. (2001). The determinants of non-farm income diversification in rural peru. World development, 29 (30): 497-508.
Grootaert, C. (1986). Measuring and analyzing levels of living in developing countries: An annotated questionnaire, World Bank living standard measurements study working paper no. 24.
Gujarati, D. N. (2003). Basic Econometrics, McGraw-Hill, New York, USA.
Ibrahim H. Rahman, EnvulusS.A, Oyewole S.O. (2009). Income and crop diversification among farming households in a rural area of north central Nigeria.Journal of Tropical Agriculture, Food, Environment and Extension. Volume 8, Number 2, pp. 84 -89.
Ijaiya, G.T. (2006). Good governance and poverty reduction in Nigeria: A framework for policy, Journal of social and economic policy, 3(1), 47-58.
Ijaiya, Gafarat. Ijaiya, Raji A. Bello, Muftau A. Ijaiya (2009). Income Diversification and Household Well-Being in Ilorin Metropolis, Nigeria. International Journal Of Business Management Economics and Information Technology Vol.1, No.1, January-June 2009: 1-12.
Joshi, P.K., Gulati, A.A., Birthal, P.S. and Twari, L. (2003). Agriculture diversification in South Asia: Pattern, determinants and policy implications. Discussion paper no. 57. Market structure studies division. International food policy Research Institute. Washington D.C.
Kinsley, b., k. Burger and j.w. gunning (1998): coping with drought in zimbabwe: survey evidence on responses of rural households to risks. In: world development 26(1): 89-110.
Laszlo, S. (2000). Labor supply and the household enterprise.The case of non-farm self employment in rural Peru, Unprocessed, Department of Economics, University of Toronto.
Minot, N., Epprecht, M., Anh, T.T.T. and Trung, L.Q. (2006). Income diversification in the northern uplands of Vietnam: Research report No.145. International food policy research institute, Washington D.C.
Narayan D., Chambers R., Shah M.K., and Petesch P. (200b). Voices of the poor: crying out for change, New York: Oxford University Press.
Narayan D., Peter R., Schaffc K., Rademacher A., and Koch-Schulte S. (2000a). Voices of the poor: Crying out for change, New York: Oxford University Press, New York.
Reardon, T., Stamouis, K.A., Balisacan, M.E.C., Berdegue, J. and Banks, B. (1998). Rural non-farm income in developing countries. In: FAO (ed.). The state of Food and Agriculture. PP. 281-356.
Reardon, T and Barrett, C.B. (2000). Agro industrialization, globalization and international development: an overview of issues, patterns and determinants. Agricultural Economics.
Reardon, T. (1997). Using evidence of household income diversification to inform study of the rural non-farm labor market in Africa. World Development, 25(5), 735-748.
Reardon, T., C. Delgado, and P. Matlon. 1992. Determinants and effects of income diversification amongst farm households in Burkina Faso. Journal of Development Studies, 28 (January1992), pp. 264-296.
Reardon, T., Cruz, M.E., Berdegue, J. (1998). Invited plenary paper at the TercerSimposioLatinoamericano de Investigation y Extension en SistemasAgropecuarios, Lima, 19-21 August.
Reardon, T., Taylor, J.E., Stamoulis, K., Lanjouw, P. and Balisacan, A. (2000). Effects of non-farm employment on rural income inequality in developing countries: An investment perspective. Journal of Agriculture economics, 51(2), May, 266-288.
Richard, Culas and Mahen, M. (2005). Causes of Diversification in Agriculture over Time: Evidence from Norwegian farming sector. Working paper No: 24647,International Congress, August 23-27, 2005, Copenhagen, Denmark.
Schgtman A., Berdegue J. and Modrego F. (2006). Income Diversification through Agricultural Development.
Schwarze, S. and Zeller, M. (2005). Income diversification of rural households in Central Sulawesi, Indonesia.Quarterly Journal of International Agriculture 44 (2005), No. 1: 61-73.
Soares, F.V. (2005). The impact of trade liberalization on the informal sector in Brazil. UNDP International Poverty Centre, working paper no. 7.
Trivelli, C. (1997). Credito en los hogaresruralesdelperu. SereiInvestigacionesBreves,4, Lima: CIE.
Valdivia, M. (1997). Mercados de trabajo y manejo de riesgo en economiasrurales: evaluacion de los hogares de pomacanchi, Cuzco. Unprocessed Lima, GRADE.
Valdivia. C., Dunn, E. and Jette, C. (1996).Diversification as a risk management strategy in an Andean agro pastoral community, American Journal of Agric Economics, 78(5), 13-34.