Effect of Non-farm Income on Rural Household Livelihood: A Case Study of Moyale District Oromia Regional State, Ethiopia

Ana Damena, Demmelash Habte


The study attempts  to investigate the link between household livelihood  and nonfarm employment and  income from  nonfarm  using the survey data collected  from 170  systematically selected  households  from  four villages of Moyale district, Oromia Regional state, Southern Ethiopia. Considering the objective of the study, given a household participated   in nonfarm employments to generate income and the  effect of generated income on household  livelihood,  Probit  and Heckman selection model (two stage) are used respectively. To examine, first the household decision with  respect  to participation in nonfarm  employment using probit model, the researcher found that age, family size,  credit, livestock holding, education ,marital status , distance to market and main road  are the most influencing variables in determining households to participate in nonfarm activities. Further , the effect of nonfarm  income on rural household  livelihood  is examined. The study indicates that nonfarm  employment provides additional income that enables farmers to spend more on their basic  needs include: food, education, closing and health care. The result of the study implied that nonfarm income has a role which is significant in maintaining household   livelihood and  to change their living standard. In  addition  the result show  that about 4.7% of  sample households primary occupation is Nonfarm activities.


Heckman selection model; livelihood; nonfarm employment , nonfarm income; probit model.

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