Household Income Diversification and Food Security: Evidence from Rural and Semi-Urban Areas in Ethiopia

Reducing food insecurity remains a major public policy challenge in developing countries. Food insecurity becomes severe in areas where households highly depend on undiversified livelihoods. However, studies linking household income diversification to food security are limited. This study, therefore, examined the effect of income diversification on food security in the Ambo district, Ethiopia. A survey of rural (n = 175) and semi-urban (n = 175) households was conducted. The Simpson’s index of diversity (SID) was used to measure the level of household income diversity. Food security (access) was measured using the daily calorie consumption (nutrition-based) and the household food insecurity access scale (HFIAS) (experience-based) methods. Consequently, we used binary logistic regression and ordinary least squares (OLS) estimation methods to determine the effect of household income diversity on food security. The instrumental variable (IV) method was also employed to overcome an endogeneity bias. The results revealed that the level of household income diversification was low, and the majority of households were food insecure. The binary logistic and the second-stage least square (2SLS) regression results suggested that income diversification contributes significantly and positively to food security in the study areas. Therefore, we conclude that income diversification reduces food insecurity by enhancing households’ access to food.