Determinant factors of livelihood diversification: Evidence from Ethiopia

Figures & data

Figure 1. Map of Gozamin district.

Table 1. Descriptive statistics of sample farms for livelihood diversification in Ethiopia

Variable	Definition	Mean	S.D.
Div	Dummy of livelihood diversifying, 1 if diversifying; 0 otherwise	0.72	0.45
Hhsex	Dummy of household head gender, 1 if male; 0 otherwise	0.72	0.45
Lnhhage	Log of age of the farm household head	44.36	12.39
Size	Family size of the household	5.23	1.62
Edu	Dummy of education, 1 if no formal education	0.68	0.47
Elem_edu	Dummy education, 1 if elementary education	0.20	0.40
Secon_edu	Dummy education, 1 if secondary education	0.11	0.32
Stud_prop	Proportion of students in the household	0.35	0.24
Lnmrkt_dist	Log of household home distance from the nearest market (km)	16.73	1.56
Land_ha	Land size owned by the household (in ha.)	1.16	0.45
Labor	Number of labor (between age of 15 and 65)	2.40	0.76
Land_right	Dummy, 1 if household feel secured for his land	0.89	0.30
Coop_mem	Dummy, 1 if a household is a member of the cooperative	0.64	0.47
Credit_serv	Dummy, 1 if a household has access to credit	0.49	0.50
Agri_exten	Dummy, 1 if household participated in agri-extension	0.72	0.44
Lnlivestock	Log of market value of livestock (in ETH currency 1$=18Birr)	30,150	15,154
Lnwage	Log of wage of labor (Annual wage)	4,663	1,398
Vill_leqleq	Location dummy, 1 if Leqleqit	0.33	0.47
Vill_weynma	Location dummy, 1 if Weynmager	0.33	0.47
Vill_addis	Location dummy, 1 if Addis-gulit	0.33	0.47
Lncropy	Log of on-farm income	20,177	9,798.9
Lnoffarmy	Log of off-farm income	1,235	1,355
Lnnonfarmy	Log of non-farm income	1,971	2,519
Lntotaly	Log of total income	23,371	11,191

Source: Own survey data.

Table 2. Determinants of livelihood diversification using logit model

Variable	Coefficients	Marginal effect (dy/dx)
Dependent
Livelihood diversification
Explanatory variables
Hhsex	0.5825 (0.4892)	0.08615 (0.0768)
Lnhhage	−2.7711** (1.2228)	−0.3759** (0.1541)
Vill_leqleq	−2.5089* (1.4122)	−0.4267 (0.2482)
Vill_weynma	−2.9063** (1.1947)	−0.5080** (0.1938)
Elem_educ	0.3743 (0.8468)	0.0471 (0.0947)
Secon_educ	−2.0936** (0.7374)	−0.4180*** (0.1562)
Stud_prop	−1.9091 (1.5320)	−0.2589 (0.1819)
Lnmrkt_dist	−22.8685*** (6.5343)	−3.1022*** (0.7624)
Land_ha	−0.2777 (0.7686)	−0.0376 (0.1068)
Labor	−0.3071 (0.3717)	−0.0416 (0.0479)
Land_right	2.1779** (0.8601)	0.4451** (0.1854)
Coop_mem	1.9734*** (0.6311)	0.3254*** (0.1099)
Credit_serv	0.3253 (0.5848)	0.0441 (0.0767)
Agri_exten	1.4062* (0.8411)	0.2485 (0.1691)
Lnlivestock	0.1551 (0.4375)	0.0210 (0.0592)
Lnwage	0.6613 (1.43509)	0.0897 (0.1912)
_Cons	67.9569*** (22.6252)	–
Number of obs = 147
Wald χ^2 (16) = 28.89
Prob. > χ^2 = 0.0247
Log pseudolikelihood = 51.164
Pseudo R2 = 0.4320

Notes: Robust standard errors are in parentheses. For dummy variables, dy/dx denotes a change from 0 to 1. Addisgult is used as the reference village, and a household head having no formal education is used as the reference for educational level, so these two variables are eliminated from estimation.

Source: Computed from own survey data.

* Indicate coefficients are statistically significant at 10% significance level.

** Indicate coefficients are statistically significant at 5% significance level.

*** Indicate coefficients are statistically significant at 1% significance level.

Table 3. SUR model of on-farm, off-farm and non-farm diversification activities

Regressors	Dependent variables
	lncropy	lnoffarmy	lnnonfarmy
Hhsex	0.3712*** (0.1174)	0.7180*** (0.2202)	0.9695*** (0.2250)
Lnhhage	0.0850 (2070)	−0.5622 (0.3957)	−0.1516 (0.4043)
Vill_leqleq	−0.5104* (0.2771)	−0.4341 (0.54747)	0.6800 (0.5593)
Vill_weynma	−0.4550** (0.2111)	−0.3840 (0.3939)	−0.0218 (0.4024)
Elem_educ	0.1121 (0.1206)	0.0745 (0.2439)	0.2239 (0.2492)
Secon_educ	−0.1037 (0.1715)	−0.2841 (0.3343)	−0.3136 (0.3415)
Stud_prop	−0.0472 (0.2239)	−0.9305** (0.4461)	−1.0264** (0.4558)
Lnmrkt_dist	−1.1765 (1.1135)	−4.588** (2.127)	−3.0306 (2.173)
Land_ha	0.3036** (0.1080)	0.2169 (0.2143)	0.3553 (0.2190)
Land_right	−0.0223 (0.2459)	−0.3333 (0.4957)	−0.0918 (0.5064)
Coop_mem	0.0664 (0.1419)	0.9641*** (0.2809)	0.4067 (0.2870)
Credit_serv	−0.0436 (0.1038)	−0.4272** (0.2036)	0.0484 (0.2080)
Agri_exten	−0.0806 (0.1768)	−0.5715 (0.3535)	0.3130 (0.3611)
Ln(tech)	0.2094** (0.0957)
Lnlivestock	0.0560 (0.1276)	0.2923 (0.2250)	0.5644** (0.2299)
Lnwage	−0.2048 (0.3803)	−0.2570 (0.6062)	−1.0179 (0.6193)
Lnoxen	0.3674 (0.3296)
Labor	−0.0547 (0.0837)	0.0513 (0.1646)	0.2047 (0.1682)
Cons	10.4444** (4.1240)	0.0513*** (0.1646)	17.2662** (8.3088)
R^2	0.4726	0.3252	0.4394
F	4.01***	2.44***	3.97***
N	98
Breusch-Pagan test of independence: χ^2 (3) = 38.503***

Notes: Standard errors are in parentheses.

* Indicate coefficients are statistically significant at 10% significance level.

** Indicate coefficients are statistically significant at 5% significance level.

*** Indicate coefficients are statistically significant at 1% significance level.