Changing Income Portfolios and Household Welfare in Rural Uganda
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Date
2021-06-17
Journal Title
Journal ISSN
Volume Title
Publisher
Routledge Taylor and Francis
Abstract
This paper provides evidence on the heterogeneous welfare implications
of rural income portfolios in eastern Uganda. We use household survey
data from two-panel rounds, and fixed and random effects estimation
and quantile regressions to estimate average and heterogeneous
effects. While the literature mostly focuses on either income
diversification or participation in non-farm activities, we distinguish
between income diversification, using the Simpson Index, and off-farm
income generation. We use ex-post income and poverty measures as
well as an ex-ante vulnerability measure to analyse welfare effects. We
find that income diversification and non-farm income generation
improve household income, and reduce poverty and vulnerability. We
find that it is most beneficial for poorer households with less land
assets to diversify their income portfolio, while moving out of
agriculture is equally beneficial at all income levels and most beneficial
for households with more human capital. We find that income
diversification reduces vulnerability most strongly at high levels of
diversification and low levels of income while non-farm income
generation reduces vulnerability at lower levels of non-farm income and
increases vulnerability at higher levels of non-farm income. Our results
lead to nuanced findings that bring additional insights in the literature
on structural transformation and rural development.
Description
Keywords
Income diversification, Nonfarm income, Poverty, Vulnerability, Rural development