A Study on the Income-Generating Activities of Rural Households in Sub-Saharan Africa to Assess Structural Transformation and Its Role in Poverty Reduction

Ilona Miettinen Langgård

Student thesis: Master thesis


This paper has examined the income-generating activities of rural SubSaharan households to discuss which policies can be implemented to increase the productivity of rural labour market with the goal of decreasing poverty in the region. The analysis was done with data from FAO’s RIGAH dataset, which included detailed information of the income-generating activities for 30,221 rural households in Ethiopia, Malawi, Uganda, Tanzania, Ghana and Nigeria. The returns to the different income generating activities were examined, and households were sorted into discrete labour market segments (‘work portfolios’) based on the activities in which they engage in. Both the determinants of selection into the different work portfolios and the determinants of welfare for each portfolio were explored through econometric analysis. The analysis showed that as a result of differences in household endowments and human capital as well as due to market imperfections, households stay trapped in the low-productivity agricultural segment, which continues to be the most prevalent labour market sector in the region. However, households are increasingly participating in informal non-farm enterprises and are diversifying their sources of income, which can function as a stepping-stone out of poverty. Further, this diversification of income can be seen as structural transformation at the grassroots level – something which macroeconomic analyses have not found evidence for in Sub-Saharan Africa.

EducationsMSc in Advanced Economics and Finance, (Graduate Programme) Final Thesis
Publication date2018
Number of pages113
SupervisorsJeanette Walldorf