Determinants of Livelihood Diversification of Rural Households in Sylhet

Abstract

Livelihood diversification is considered as a constructive way to improve the livelihood of poor people in rural Bangladesh. This study examines the level of livelihood diversification and the determinants of livelihood diversification of rural households in Sylhet division by using both primary and secondary data. The primary data were collected from two districts of Sylhet division by adopting simple random sampling procedures. A face to face interview was employed to collect cross section data of total 210 respondents in which semi-structured and pre-tested questionnaire was used. Descriptive statistics, Simpson diversification indexing and Logit model analysis were employed for analyzing the data in accordance with the objectives of the study. The socioeconomic attributes of different respondents indicate that characteristics of sampled respondents differ from each other in respect of their age, gender, literacy rate, family composition, land holdings, credit access etc. However, in rural Bangladesh, a considerable number of households have diversified their livelihoods at different levels through several income generating activities. Though medium and highly diversified households are majority in rural areas; which accounts for 37% and 26% of total households, respectively. Logit model was estimated to analyze the determinants and find that several factors either positively or negatively affect the extent of livelihood diversification. Gender, education level, land holdings and credit access had positive and significant effects on livelihood diversification. On the other hand, dependency ratio and savings had a negative but significant effect on diversification of livelihood in rural areas. Considering the findings, the study suggested some policy implication like encouraging entrepreneurship, expanding credit facilities, development of rural infrastructure along with market facilities; introducing effective pro-poor policies that may assist all poor people to generate more income and higher-return activities. Hence policies that widen the extent of income earning sources and livelihood diversification should be given proper attention.