Determinants of off-farm participation decision of farm households in Ethiopia

Abstract This study analyses the determinants of off-farm work participation decisions of farm households in Ethiopia. A bivariate probit model is applied to account for the simultaneity of participation decisions of both male and female members of farm households. The results of the analysis show that human capital variables such as health and training on non-farm activities have a positive effect on the off-farm participation decisions of male members of farm households. The education status of the head has no significant impact on the participation decisions of the members of the family as most of the off-farm activities do not require formal education. The availability of credit and transfer income is the other factors that have a positive impact on the decisions of male members to participate in off-farm activities. The effects of family and farm characteristics are also analysed. Finally, policies that aim to increase the off-farm work participation decisions of family members should take into consideration the difference in responses to the various factors that affect the off-farm work decisions of male and female members of farm households.