Income Sources Diversification: Empirical Evidence from Edo State, Nigeria

Abstract

This study reviews the cases of income sources diversification in developing countries and concluded with empirical evidence from Edo state, Nigeria. It shows that non farm income as share of total income in Africa and Latin Amer- ica was 43%, while it was 51% for Asia. The empirical evidence from Edo state in Nigeria indicates that 46% of the people have a well diversified portfo- lio. The evidence from Edo state shows that the major sources of income in Edo state are wages and salary (33%), rent from assets (33%), sales of farm produce (14%) and trading (7%). It also indicates that income increases with level of education, with Junior Secondary school education being the lowest and First degree being the highest. The empirical evidence also indicates gen- erally that income increases with increase in number of income sources and five income sources being the optimum that gives the highest mean income. The regression analysis shows that income sources diversification, education and location are positive and significant determinants of income, while gender has non-significant relationship with income in Edo state. These findings sug- gest that the increase in opportunity for people to diversify their income base will increase their household income. Those opportunities were recommended in this paper.