Non-farm Employment, Agricultural Inputs Investment, and Productivity Among Rural Households’ in Tigray (Northern Ethiopia)

Nonfarm livelihood activities in Ethiopia are an important source of rural household income. Yet, evidence regarding what determines rural households’ participation and how nonfarm employment interacts with agricultural inputs investment and productivity in the study area are scarce. Hence, in this study the determinants of households’ nonfarm employment participation have been examined, and also the effect of income earning nonfarm activities on agricultural inputs investment and productivity in Tigray, northern Ethiopia has been analysed. The study is made based on household level data collected from randomly selected 455 rural families. And the results from the Logit regression indicated that livestock holding, access to credit and male household head significantly increases nonfarm employment participation. On the contrary, the possibility of participation decreased with age, number of children, irrigation and remittance. Further, the propensity score matching estimates indicated that nonfarm employment significantly decreases agricultural inputs investment. Similarly, participation in nonfarm employment activities significantly lowered investment on crop inputs. Further, estimates from Instrumental variable Tobit (IVTobit) and ordinary least square (OLS) consistently indicated that nonfarm employment retards agricultural crop/vegetable productivity in the study area.