The determinants and purpose of income diversification of rural households in Bangladesh

This study determines the factors that affect the nature and extent of
household income diversification in Bangladesh. The study also investigates
whether the motivation for diversification was to support asset accumulation or
survival. The findings show that the extent of the diversification index is
determined by household endowments of assets such as wealth, a higher
number of earners, higher education, easy access to market, and better
infrastructure. The motive for overall diversification was accumulation, not
survival. An interesting finding was that off-farm income diversification
serves a two-fold purpose. Wealthier households are attracted into off-farm
self-employment to get a higher return facilitated by easy access to financial
assets, and labour endowment. Credit constrained poor households are
influenced by endowment in the form of education and labour to diversify into
off-farm wage activities as a mean of survival. Investment in infrastructure,
electrification and education does and will support income diversification in
Bangladesh.