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Non-farm Income and Consumption Expenditures in Rural Bangladesh: Empirical Evidence from Multilevel Regression Modelling

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  • M. J. Hossain

    (Bangladesh Agricultural University)

  • A. K. M. Abdullah Al-Amin

    (Bangladesh Agricultural University)

Abstract

This study examines the effects of non-farm income on household consumption expenditures in rural Bangladesh. A two-stage endogenous treatment effect model is built on data from a nationally representative Household Income Expenditure Survey (HIES) 2010 to control selection bias. The HIES follows a hierarchical data structure because the survey is based on two-stage stratified sampling. A multilevel mixed-effects linear regression model is used to capture the unobserved heterogeneity between clusters (PSUs) along with revealing important factors. Results reveal that non-farm income has a significant positive effect on household’s consumption expenditures and non-farm income recipient households spend about 29% more than their counterparts. In addition, higher level of per capita income, education, smaller family size and lower dependency ratio are found to be more effective in increasing consumption expenditures of rural households. Significant cluster-level variations are observed in the analyses. This study recommends that non-farm income generating activities should be encouraged among rural households as this would raise their consumption expenditures and hence, improve welfare and living standards among them.

Suggested Citation

  • M. J. Hossain & A. K. M. Abdullah Al-Amin, 2019. "Non-farm Income and Consumption Expenditures in Rural Bangladesh: Empirical Evidence from Multilevel Regression Modelling," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(2), pages 377-396, June.
    • Handle: RePEc:spr:jqecon:v:17:y:2019:i:2:d:10.1007_s40953-018-0134-7
    DOI: 10.1007/s40953-018-0134-7
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    Cited by:

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    2. A. K. M. Abdullah Al-Amin & Khorshed Alam & Uttam Babu Shrestha & Masudul Haque Prodhan & Mostafa A. R. Hossain & Nahid Sattar & M. J. Hossain & Tahmina Akhter, 2021. "Ecosystems, livelihood assets and willingness to pay for wetland conservation in Bangladesh," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(12), pages 17503-17534, December.
    3. Shiba Shankar Pattayat & Jajati Keshari Parida & I. C. Awasthi, 2022. "Reducing Rural Poverty Through Non-farm Job Creation in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(1), pages 137-160, March.

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    More about this item

    Keywords

    Non-farm income; Consumption expenditures; Treatment effect model; Multilevel regression; Rural households; Bangladesh;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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