Heterogeneous Returns to Income Diversification : Evidence from Nigeria
This paper investigates the impact of income diversification on farming households' welfare in Nigeria on two rounds of the Nigeria General Household Survey-Panel, namely the 2010/2011 and 2012/2013. The study finds that income diversification...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/385071479755915911/Heterogeneous-returns-to-income-diversification-evidence-from-Nigeria http://hdl.handle.net/10986/25696 |
| Summary: | This paper investigates the impact of
income diversification on farming households' welfare
in Nigeria on two rounds of the Nigeria General Household
Survey-Panel, namely the 2010/2011 and 2012/2013. The study
finds that income diversification is the norm in Nigeria,
with about 60 percent of farmers diversifying away from
subsistence farming into non-farm activities and cash crops.
In addition, using the panel of farmers interviewed before
and after a severe drought that hit Northern Nigeria in
particular in 2011, the study finds that diversification
increased throughout Nigeria from 60 to 64 percent and in
the North from 58 to 63 percent. The study postulates the
existence of heterogeneous returns on diversification as a
consequence of the drought, and estimates the returns
through a non-parametric selection model using a local
instrumental variable. The choice of this model is dictated
by the necessity to account for both heterogeneous effects
of diversification and selection bias related to
households' decision to diversify. Overall, it is found
that diversification positively affects consumption in
Nigeria. However, who benefits the most is crucially
determined by the initial conditions under which
diversification is undertaken and the specific agro-climatic
context in which households operate. |
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