Income Diversification in Zimbabwe: Welfare Implications from Urban and Rural Areas

By Lire Ersado. 2006

143 citations recorded by the source corpus.

The author examines, taking into account the urban-rural divides, the changes and welfare implications of income diversification in Zimbabwe following macroeconomic policy changes and droughts of the early 1990s. Data from two comparable national income, consumption and expenditure surveys in 1990-91 and 1995-96, which straddled a period of economic volatility and natural disasters, show that the percentage of households earning income from private and informal sources grew considerably, while that from government and formal sources declined in the aftermath of the drought and policy changes. The author finds that, in general, rural households tend to have a more diversified portfolio of income compared with their urban counterparts, and the degree of diversification decreases with the level of urbanization. However, there are important differences in the level of diversification within the rural and urban areas depending on wealth: While the relatively better-off households have a more diversified income base in rural areas, it is the poor who pursue multiple income sources in urban areas. A decomposition of changes in welfare indicates that the total contribution of income diversification is large and increased between 1990-91 and 1995-96 in both urban and rural areas. On the other hand, there were significant declines in returns to human and physical capital assets during the same period. The findings suggest that households with a more diversified income base are better able to withstand the unfavorable impacts of the policy and weather shocks. The fact that relatively better-off households have a more diversified income base following the shocks implies that the poor are more vulnerable to economic changes unaccompanied by well-designed safety nets.

Subfields: Economics and Econometrics, Safety Research, Soil Science

View Paper: https://www.semanticscholar.org/paper/b845c4905eccc745fc1b71fe227f0d268a8e90eb

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. M. Qaim
2. N. Minot
3. S. Asfaw
4. Belay Simane
5. R. Babatunde
6. M. Maertens

In Safety Research

1. M. Qaim
2. Michael Epprecht
3. L. Trung
4. T. P. Anh
5. N. Minot
6. S. Asfaw
7. R. Babatunde
8. B. McCaig

In Soil Science

1. M. Qaim
2. N. Sitko
3. S. Asfaw
4. Belay Simane
5. R. Babatunde
6. Amogne Asfaw
7. A. Bantider
8. Ali Hassen

Citations in the corpus

• Impact of off-farm income on food security and nutrition in Nigeria (2010, result): “Ruben and van den Berg (2001) obtained similar results for Honduras, and Ersado (2003) showed that non-farm income diversification is associated with a higher level of consumption expenditure in Zimbabwe.”
• Patterns of income diversification in rural Nigeria: determinants and impacts. (2009, background): “It is then calculated as the sums of squares of income shares from each income source (ERSADO, 2003).”
• Income Diversification And Poverty in the Northern Uplands of Vietnam (2006, background): “Thus, a household with two sources of income would be more diversified than a household with just one source, and a household with two income sources, each contributing half of the total, would be more diversified than a household with two sources, one that accounts for 90 percent of the total (see ”
• Heterogeneous impact of livelihood diversification on household welfare: Cross-country evidence from Sub-Saharan Africa (2019, background): “, 2006); or to deal with the uncertainty of agricultural production (ex-ante) (Asmah, 2011; Babatunde & Qaim, 2009; Ellis, 1998, 2004; Ersado, 2003; Newsham & Thomas, 2009).”
• Determinants of non-farm livelihood diversification: evidence from rainfed-dependent smallholder farmers in northcentral Ethiopia (Woleka sub-basin) (2017, background): “Relatively better-off households in rural areas would have a more diversified income base while poor in urban areas pursue multiple income sources (Ersado 2003).”