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Income diversification before and after economic shocks: evidence from urban and rural Zimbabwe

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  • Lire Ersado

Abstract

The article examines changes in income and activity diversification in Zimbabwe before and after macroeconomic policy changes and the droughts of the early 1990s. Data from two comparable national surveys straddling a period of economic volatility show that the percentage of households earning income from private and informal sources grew considerably, while income from government and formal sources declined. In general, rural households tend to have a more diversified portfolio of income than urban households, and the degree of income diversification decreases with the level of urbanisation. Following the shocks, there was a marked reduction in income diversification, notably among the poor. The findings thus strengthen the need for public provision of well-designed safety nets.

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  • Lire Ersado, 2005. "Income diversification before and after economic shocks: evidence from urban and rural Zimbabwe," Development Southern Africa, Taylor & Francis Journals, vol. 22(1), pages 27-45.
    • Handle: RePEc:taf:deveza:v:22:y:2005:i:1:p:27-45
    DOI: 10.1080/03768350500044347
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    1. Frederic ZIMMERMAN & Michael R. CARTER, 1996. "Dynamic Portfolio Management Under Risk And Subsistence Constraints In Developing Countries," Staff Papers 402, University of Wisconsin Madison, AAE.
    2. Ellis, Frank, 2000. "Rural Livelihoods and Diversity in Developing Countries," OUP Catalogue, Oxford University Press, number 9780198296966.
    3. Frank Ellis, 2000. "The Determinants of Rural Livelihood Diversification in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 289-302, May.
    4. Zimmerman, Frederic & Carter, Michael R., 1996. "Dynamic Portfolio Management Under Risk And Subsistence Constraints In Developing Countries," Staff Papers 12649, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
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