Impact of Off-farm Sector Involvement on Welfare of Rural Households in Nigeria: A Propensity Score Matching Approach

Abstract

This study investigated the impact of off-farm employment on the welfare of households in rural Nigeria employing household data obtained from the RIGA database. A sample of 14,512 rural households was used for the study. Propensity Score Matching (PSM) method was employed to evaluate the impact of participating in both wage and self-employment on the welfare of rural households whose major occupation is farming. Results from analysing socio-economic characteristics showed that majority of the rural households in Nigeria were male headed. These households had very little access to credit especially from formal institutions. Also, most of the households owned land the land they cultivated. The results from the PSM estimations showed that off-farm employment had a positive and robust effect on farm household income. Off-farm participants were observed to have greater consumption expenditure than the non-participating rural households. On average, a rural households involved in off-farm was 8,583 Nigerian naira better-off than a non-participating household. The study therefore recommends relevant policies that will have direct bearing on the rural off-farm sector by enhancing market integration and stimulating the growth of the off-farm sector.