The Impact of Off-farm Activities on Rural Household Income in Wolaita Zone, Southern Ethiopia

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.

Does non-farm employment increase rural households’ consumption: Empirical Evidence from West Ethiopia?

“…Agriculture is vital source of income generation for the rural population in Sub-Saharan African countries, and it remains a viable choice for boosting growth, alleviating poverty, and ensuring food security (Abdurezak and Adinan, 2020).However, farming as a primary source of income has failed to provide a sufficient living for farming households in rural areas (Gazuma et al, 2019).This is owing to the region's (Sub-Saharan Africa's) agricultural sector being characterized by drought, erratic rainfall, diminishing per capita land size, low production per hectare, and a high degree of subsistence farming (Iqbal et al, 2017). Non-farm activity becomes an alternative source of income that increases household consumption.…”

“…In the absence of credit constraints, non-farm income becomes an important factor in ensuring rural households' food security (Zewdu and Woldeyohannis, 2021). Non-farm participation can assist in alleviating financial and liquid asset constraints in agriculture while also boosting agricultural competitiveness (Ganamo and Astatike, 2019).…”

“…Indeed, empirical research on the impact of non-farm employment on rural household consumption has yielded conflicting results. For example, some authors such as; Alemu et al,(2021) ;Asfaw,(2022) have found that non-farm employment improves household consumption by using a probit model of qualitative data and household characteristics such as age, gender, educational level, marital status, household size, and landholding size that are statistically significant, and the other researchers like Awoke,(2019); Anteneh and Gazuma,(2019) have found that non-farm is ineffective to improve household consumption by using a logistic model, and it was discovered that some forms of non-farm jobs reduce household consumption. However, the disparity could be attributable to methodological and variable variances among the disputants.…”

“…Non-farm rural income enables families to improve their consumption and spending habits, be more financially stable, and achieve their goals. Poorer farm households that engage in non-farm activities increase their assets, which are needed for children's education, agricultural land ownership, input purchases, and adoption of productivity-enhancing technology, all of which help to increase agricultural production and yields (Ermias, 2019). According to Neglo et al,(2021), the non-farm sector facilitated upward mobility and increased consumption among low-educated households.…”

Impact of Non-farm Activities on Wellbeing of Rural Household, the Case of Kersa District, Eastern Hararghe Zone, Ethiopia

“…Therefore, So as to handle the problem with food security encouraging nonfarm activity is one of an alternative strategy [35]. Similarly in study of [36] So as to improve household income and achieve food self-sufficiency promotes non-agricultural activities play a significant role.…”