Factors Affecting Rural Households’ Income Diversification: Case of Zoba Maekel, Eritrea
[1]
Ghirmai Tesfamariam Teame, Department of Economics, College of Business and Economics, Halhale, Eritrea.
[2]
Tesfa-Yesus Mehary Woldu, Department of Economics, College of Business and Economics, Halhale, Eritrea.
This paper examines the effects of internal and external factors on total household’s income through OLS method and the determinants of incomes earned from various income generating activities with the help of Tobit models, based on household level survey data from 4 villages in Zoba Maekel, Eritrea. The study revealed that ownership of irrigated and rain-fed area and livestock units; human capital; social capital; off-farm income and unearned income, have positive effect on total household income. Regarding activities income, income from any kind of wage-employment and non-agricultural wage-employment are negatively related with livestock possession. Probability of being male headed household has positive effect on income from non-agricultural wage-employment and any kind of wage-employment, while it has a negative effect on income from non-agricultural self-employment. The positive effects of: years of schooling of head of household on income from off-farm; adult members on income from non-agricultural self-employment and crop production; number of dependents on income from non-agricultural self-employment and off-farm employment; risk on income from all agricultural and non-agricultural wage-employments are documented. Furthermore, negative effects of distance to the nearest market on income from any kind of wage-employment and non-agricultural wage-employment are found. The results of the analyses are used to draw policy recommendations with respect to activity diversification and rural development which would assist in alleviating rural poverty.
Rural Non-farm, Off-Farm, Livelihood Diversification, Total Income, Activity Income, Eritrea, Zoba Maekel
[1]
Adams, R. H. Jr, “Non-farm Inocme, Inequality, and Poverty in Rural Egypt and Jordan”, Policy Research Working Paper No. 2572, The World Bank, 2001.
[2]
Araya, B., “Poverty and Natural Resource Management in the Central Highlands of Eritrea”, PhD dissertation, Groningen University, 2004.
[3]
Barrett, C. B., Reardon, T., “Asset, Activity, and Income Diversification Among African Agriculturists: Some Practical Issues”. Project Report to the USAID BASIS CRSP, 2000.
[4]
Corral, L., Reardon, T., “Rural Non-farm Incomes in Nicaragua”, World Development, vol.29, no.3, pp. 427-442, 2001.
[5]
Deininger, K., Olinto, P., “Rural Non-farm Employment and Income Diversification in Colombia”, World Development, vol.29, no.3, pp. 455-465, 2001.
[6]
De Janvry, A., Sadoulet, E., “Inocme Strategies Among Rural Households in Mexico: The role of Off-farm Activities”, World Development, vol. 29, no.3, pp. 476-481, 2001.
[7]
Ellis, F., “Rural Livelihoods and Diversity in Developing Countries”, Oxford: Oxford University Press, 2000.
[8]
Ellis, F., “The determinants of Rural Livelihood Diversification in Developing Countries”, Journal of Agricultural Economics, vol. 51, no. 2, pp. 298-302. 2000.
[9]
Escobal, J., “The Determinants of Non-Farm Income Diversification in Rural Peru’, 9 Development, vol. 29, no.3, pp. 497-508, 2001.
[10]
Food and Agricultural Organization, “Rural Non-farm Income in Developing Countries, Part III of the state of food and Agriculture”, FAO: Rome, 1998. Available at: http://www.fao.org/docrep/w9500e/w9500e12.htm [Accessed 28/09/2006]
[11]
GOE, “Eritrea: Food Security Strategy”. Government of the State of Eritrea, Asmara, 2004.
[12]
Gorden, A., Craig, C., “Rural Non-farm Activities and Poverty Alleviation in Sub Saharan Africa”. Policy Series 14. Chatham, UK: Natural Resource Institute, 2001.
[13]
Greene, W. H., “Econometric Analysis”, 5th Edition. Prentice Hall. Pearson Education International, 2003.
[14]
Kleijnen, J. P. C., Vonk Noordegraaf, A. and Nielen, M., “Sensitivity Analysis of Censored output through Polynomial, Logistic, and Tobit Regression Meta-Models: Theory and Case study”. Proceedings of the 2001 Winter Simulation Conference, 2001.
[15]
McDonald, J. F., Moffitt, R. A., “The Uses of Tobit Analysis”, The Review of Economics and Statistics, vol. 62, no. 2, pp.318-321, 1980.
[16]
Perz, S. G. L., “The Importance of Household Asset Diversity for Livelihood Diversity and Welfare Among Small Farm Colonists in the Amazon”, The Journal of Development Studies, vol. 41, no. 7, pp. 1193-1220, 2005.
[17]
Reardon, T., “Using Evidence of Household Income Diversification to Inform Study of the Rural Non-farm Labour Market in Africa”, World Development, vol. 25, no. 5, pp. 135-174, 1997.
[18]
Reardon, T., Berdegue’, J., Barrett, C. B. and Stamoulis, K., 2006) “Household Income Diversification into Rural Non-farm Activities”, in Haggblade, S., Hazell, P. and Reardon, T (eds) Transforming The Rural Non-farm Economy (Forthcoming). Baltimore: Johns Hopkins University Press, 2006.
[19]
Smith, D. R., Gorden, A., Meadows, K. and Zwick, K., “Livelihood diversification in Uganda: patterns and determinants of change across two rural districts”, Food Policy, vol.26, pp. 421-435, 2001.
[20]
Teame, Ghirmai Tesfamariam, “Determinants of Rural Households’ Participation in Income Generating Activities in Central Region, Eritrea”, Journal of Economics and Sustainable Development, vol. 6, no. 17, pp.193-205, 2015.
[21]
Winters, P., Davis, B., and Corral, L., “Assets, Activities and Income generation in rural Mexico: factoring in social and public capital’, Agricultural Economics, vol. 27, pp.139-156, 2002.
[22]
World Bank, “Eritrea: Country Brief”. 2007. Available on line at: http://go.worldbank.org/CSITZX5Z80. [Accessed 20/05/2007]
