Income Diversification of Rural Households in Zoba Maekel, Eritrea


  • Ghirmai Tesfamariam Teame College of Business and Economics



income diversification, non-agricultural income, Shannon equitability index, Eritrea, Tobit


The study, conducted in Zoba Maekel, Eritrea, has examined the factors affecting the diversification of income of rural households using two concepts of diversification. The first one is based on household’s diversification away from their own farm, which is measured as the proportion of rural households’ income from non-farm activities in their total income; whereas the second one focuses on diversification as an increase in the number of rural households’ income earning activities regardless of their sectoral or functional classification, which is measured using Shannon equitability index. The study has reported that household’s income diversifications are highly related to their access to formal credit, livestock possessions, and year of schooling of household’s head or average year of schooling of members of the household. Moreover, it has supported the hypothesis that diversification is an ex-post coping strategy for low agricultural productivity, and confirmed the presence gender bias in the overall diversification of rural households.


Araya, B. (2004). Poverty and Natural Resource Management in the Central Highlands of Eritrea (PhD dissertation, Groningen University, Netherlands).

Beals, M., Gross,L. and Harrel, S. (2000). Diversity Indices: Shannon’s H and E. Retrieved from cent7Egross/bioed/bealsmodules/shannonDI.html.

Barrett, C. B., & Reardon, T. (2000). Asset, activity, and income diversification among African agriculturalists: Some practical issues.

Barrett, C. B., Bezuneh, M., & Aboud, A. (2001). Income diversification, poverty traps and policy shocks in Côte d’Ivoire and Kenya. Food Policy, 26(4), 367-384.

Block, S., & Webb, P. (2001). The dynamics of livelihood diversification in post-famine Ethiopia. Food policy, 26(4), 333-350.

De Janvry, A., & Sadoulet, E. (2001). Income strategies among rural households in Mexico: The role of off-farm activities. World development, 29(3), 467-480.

Ellis, F. (1992). Peasant Economics: Farm households and agrarian development. Cambridge University Press. Cambridge.

Ellis, F. (1998). Household strategies and rural livelihood diversification. The journal of development studies, 35(1), 1-38.

Ellis, F. (2000). Rural livelihoods and diversity in developing countries. Oxford university press.

Food and Agricultural Organization (FAO). (1984). Year Book of Production. FAO: Rome

Government of the State of Eritrea (GOE). (2004). Eritrea: Interim poverty reduction strategy paper (I-PRSP). Government of the State of Eritrea, Asmara.

Greene, W.H. (2003). Econometric Analysis (5th Ed.). Prentice Hall. Pearson Education International.

Grootaert, C. (1999). Social capital, Household Welfare and Poverty in Indonesia. Washington D.C.: The World Bank.

Haggblade, S., Hazell, P., & Brown, J. (1989). Farm-nonfarm linkages in rural Sub-Saharan Africa. World Development, 17(8), 1173-1201.

Kleijnen, J. P., Vonk Noordegraaf, A., & Nielen, M. (2001, December). Sensitivity analysis of censored output through polynomial, logistic, and tobit regression meta-models: theory and case study. In Proceedings of the 33nd conference on Winter simulation (pp. 486-491). IEEE Computer Society.

McDonald, J. F., & Moffitt, R. A. (1980). The uses of Tobit analysis. The review of economics and statistics, 318-321.

Niehof, A. (2004). The significance of diversification for rural livelihood systems. Food policy, 29(4), 321-338.

Reardon, T. (1997). Using evidence of household income diversification to inform study of the rural nonfarm labor market in Africa. World development, 25(5), 735-747.

Reardon, T., Stamoulis, K., Balisacan, A., Cruz, M. E., Berdegué, J., & Banks, B. (1998). Rural non-farm income in developing countries. The state of food and agriculture, 1998, 283-356.

Reardon, T., Berdegué, J., Barrett, C. B., & Stamoulis, K. (2007). Household income diversification into rural nonfarm activities. In S. Haggblade, P. B. R. Hazell, T. Reardon (Eds.), Transforming the rural nonfarm economy: opportunities and threats in the developing world, 115-140. Baltimore: The John Hopkins Publishing Press.

Woldenhanna, T., & Oskam, A. (2001). Income diversification and entry barriers: evidence from the Tigray region of northern Ethiopia. Food Policy, 26(4), 351-365.

Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. MIT press.

World Bank. (2007). Eritrea: Country Brief.

Retrieved from

World Bank. (1996). Eritrea Poverty Assessment. Report No. 15595-ER. Population and Human Resources Division. Eastern Africa Department. African Region.

Teame, G. T. (2015). Determinants of Rural Households’ Participation in Income Generating Activities in Central Region, Eritrea. Journal of Economics and Sustainable Development, 6(17), 193-205.

Teame, G. T., & Woldu, T. Y. M. (2016). Factors Affecting Rural Households’ Income Diversification: Case of Zoba Maekel, Eritrea. American Journal of Business, Economics and Management, 4(2), 7-15.

Schwarze, S., & Zeller, M. (2005). Income diversification of rural households in Central Sulawesi, Indonesia. Quarterly Journal of International Agriculture, 44(1), 61-74.




How to Cite

Teame, G. T. (2018). Income Diversification of Rural Households in Zoba Maekel, Eritrea. Archives of Business Research, 6(8).