Title: The determinants and purpose of income diversification of rural households in Bangladesh

Authors: Sheikh Feroze Rehan; John Sumelius; Stefan Bäckman

Addresses: Department of Economics and Management, Faculty of Agriculture and Forestry, University of Helsinki, P.O. Box 27, Latokartanonkaari 5, FI-00014, Finland ' Department of Economics and Management, Faculty of Agriculture and Forestry, University of Helsinki, P.O. Box 27, Latokartanonkaari 5, FI-00014, Finland ' Department of Economics and Management, Faculty of Agriculture and Forestry, University of Helsinki, P.O. Box 27, Latokartanonkaari 5, FI-00014, Finland

Abstract: This study determines the factors that affect the nature and extent of household income diversification in Bangladesh. The study also investigates whether the motivation for diversification was to support asset accumulation or survival. The findings show that the extent of the diversification index is determined by household endowments of assets such as wealth, a higher number of earners, higher education, easy access to market, and better infrastructure. The motive for overall diversification was accumulation, not survival. An interesting finding was that off-farm income diversification serves a two-fold purpose. Wealthier households are attracted into off-farm self-employment to get a higher return facilitated by easy access to financial assets, and labour endowment. Credit constrained poor households are influenced by endowment in the form of education and labour to diversify into off-farm wage activities as a mean of survival. Investment in infrastructure, electrification and education does and will support income diversification in Bangladesh.

Keywords: off-farm diversification of income; overall diversification of income; motivation for diversification; factors; Simpson index of diversity; patterns of household income; agricultural household model; AHM; income diversification; determinants; purpose; Bangladesh.

DOI: 10.1504/IJARGE.2019.103311

International Journal of Agricultural Resources, Governance and Ecology, 2019 Vol.15 No.3, pp.232 - 251

Received: 29 Dec 2018
Accepted: 10 Jun 2019
Published online: 25 Oct 2019 *

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