• Yisihake Ergicho
• Dr. Anupama Uppal

Abstract This paper examines determinants of income diversification and its share to total household income among rural farm households using cross sectional data collected from South, Nations, Nationalities and People Region, Ethiopia. The data were collected through using well-structured questioners. The study employed a combination of multistage and purposive sampling techniques in the selection of 420 rural farm households. Both descriptive statistics and rigorous econometric models were used to analyze the data. In regards to this, censored Tobit model was used to analyze the determinants of level of income diversification while Multinomial logit model was used to pinpoint factors influencing households’ decision to participate in various off-farm income diversification sources. The descriptive statistic result revealed that farm income sources are the most important income source for rural farm households in the study area, contributing 66% of total household income with the remaining 34% originating from off-farm income sources. The level of income diversification and household head participation in off-farm income diversification sources are found to be influenced by human capital related variables (sex and age of rural farm household head, education level of household head, family size, number of economically active family members and wealth status farm household head), livelihood assets (livestock holding size, size of total and cultivated land, farm and total household income, asset ownership and type of agro ecologic zone), institution related variables (household head access to credit, membership in farmers’ cooperative and experience on agricultural extension service) and infrastructure related variables (distance from market center and main road). Based on the findings, it is recommended that the policymakers need to consider these factors in the planning of farm and non-farm initiatives in the study area.

Key Words: Determinants, Income diversification, Multinomial Logit, Participation, Rural farm household, Tobit regression

"Determinants of Income Diversification and Its Share to Total Household Income in South, Nations, Nationalities and People Region, Ethiopia", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.5, Issue 11, page no.362-374, November-2018, Available :http://www.jetir.org/papers/JETIR1811953.pdf

"Determinants of Income Diversification and Its Share to Total Household Income in South, Nations, Nationalities and People Region, Ethiopia", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.5, Issue 11, page no. pp362-374, November-2018, Available at : http://www.jetir.org/papers/JETIR1811953.pdf