Impact of non-farm income on welfare in rural Bangladesh: Multilevel mixed-effects regression approach

Al-Amin, A.K.M. Abdullah and Hossain, M.J. (2019) Impact of non-farm income on welfare in rural Bangladesh: Multilevel mixed-effects regression approach. World Development Perspectives, 13, 95-102. (doi:10.1016/j.wdp.2019.02.014).

Record type: Article

Abstract

This study uses a two-stage econometric framework based on multilevel mixed-effects linear regression model with nationally representative Household Income Expenditure Survey (HIES) data in 2010 to investigate the effects of non-farm income on asset ownership of rural Bangladeshi households. Result reveals that non-farm income has a significant positive effect on household’s asset ownership. This study also uses Horvitz-Thompson (HT) estimator of the Foster, Greer and Thorbecke (FGT) indices and Gini, Theil’s and Atkinson income inequality measures to examine the impact of non-farm income on poverty and income distribution. The poverty measures reveal that the inclusion of non-farm income reduces the level, depth and severity of poverty as well as poverty risk at division level and in rural Bangladesh. However, non-farm income increased income inequality among rural households. As the agriculture of Bangladesh is subsistence and semi-commercial in nature, it is essential to encourage non-farm income activities to accelerate well-being among rural agricultural households.

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