Income diversification and household welfare in Tanzania 1991-2018: Evidence from a synthetic panel

Contents

1. Abstract
2. Citation
3. Links

Abstract

For over a quarter century (1991 to 2018) Tanzania has been experimenting with structural adjustment reforms that have seen impressive macroeconomic performance and sustained growth in one hand but a sluggish poverty reduction in the other hand.

Using four rounds of successive Tanzania National Household Budget Surveys (1991 to 1992, 2000 to 2001, 2011 to 2012 and 2017 to 2018), the authors construct synthetic (pseudo) panel data to investigate the role of sources of income (labour diversification) on household welfare (consumption expenditure).

Their analysis shows that over time the share of households with farm income sources has declined with an increasing share of households with non-farm income (though at a slower pace); which is primary evidence of the signs of the structural transformation in the economy. Diversification as means of accumulation hypothesis and in line with previous studies in the region and in Tanzania, the study findings show that household income diversification significantly improves household welfare. However, there are substantial differences in the impacts, with a wider impact for rural than urban households. The authors results are robust to alternative measures of household income diversification, the share of workers in farm and non-farm activity. Clearly, if the government is serious about addressing poverty in general and rural poverty, it has therefore to enhance rural infrastructure that enhances the returns of both on-farm and off-farm activities.

This is an output of the Structural Transformation and Economic Growth (STEG) programme.

Citation

Hongoli J and Leyaro V. 'Income diversification and household welfare in Tanzania 1991-2018: Evidence from a synthetic panel' Structural Transformation and Economic Growth (STEG) WP085, 2024

Links

Income diversification and household welfare in Tanzania 1991-2018: evidence from a synthetic panel

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