Determinants of Livelihood Choices: An Empirical Analysis from Rural Bangladesh

Abstract

The study identifies socio-economic determinants of livelihood choices of rural households in Bangladesh (4,195 households from 139 villages) by applying a multinomial logit model of occupational choice and a multivariate Tobit model that allows for jointness in decision making. Results reveal that households choose multiple livelihood options. A number of socio-economic factors and resources at the household level as well as the state of rural infrastructure significantly determine households’ livelihood choice. Overall, resource-rich and educated households engage in diversified livelihoods and rural infrastructure promotes such diversification. Female-headed households fail to participate in any of the livelihood categories and consequently earn significantly lower income. Policy implications include investment in rural infrastructure, irrigation, rural electrification, education, livestock resources, as well as targeting of female-headed households, for example, creation of a hired labour market and skills/education programmes for females.