Determinants of Participation in Non-Farm Activities among Rural Households in Osun State- An Application of Multinomial Logit (Mnl) Model

Abstract

Recently, there is a growing recognition that rural households receive their income from a diverse portfolio of activities and that one of the most important of these activities is the rural non-farm sector. The study was carried out in Osun – State, Nigeria. The study is based on primary data obtained through the use of 354 structured questionnaire administered to selected rural household head in the area, adopting a multistage sampling procedure. The model of analysis was a multinomial logit model.The result of the analysis shows that the log-likelihood value of the model is -165.9833, the likelihood ratio (Χ² ) value of 441.9926 which is greater than critical chi-square at 1% level of significance and this confirm that all the slope coefficient are significant different from zero, that is the explanatory variables  are collectively significant in explaining determinants of non-farm participation, an indicative of goodness of fit for the estimated model. Individual variables like Age of the household head, its square, Gender, and farming experience are found to be significant for non-farm self-employment. While only education and Gender coefficient were found to be significant for non-farm wage employment. Household variables like household landholding is one of the most important household level determinants of non-farm  self-employment in the study area, membership of cooperative and the value of asset were also significant in determine non-farm self- employment. For non-farm wage employment, the major determinant were household size, access to credit, total farm size and membership of cooperative. Among the community variables, distance to the nearest market and index of access to communication facilities were determinant of non-farm self-employment in the study area. For non-farm wage employment, only land productivity index has a strong negative effect on its participation.The study therefore recommended provision of social amenities like good road, potable water, electricity, availability of modern market facilities in rural areas by government and private developers will go a long way in promoting non-farm activities in rural area. Community development association and non-governmental organization (NGOs) can also help in this issue.

Keywords: Determinants, Participation, Non-farm activities, Rural-household.