Effect of livelihood diversification on households’ food security: A propensity score analysis

In Ethiopia, agriculture is crucial for reducing poverty and improving food security among rural households. However, the country continues to face significant food insecurity and vulnerability to famine. Livelihood diversification beyond agriculture is often neglected, contributing less than 17 % to the economy, despite its potential benefits for food security. This research analyzes the impact of livelihood diversification on household food security using a mixed-methods approach. A cross-sectional survey was conducted with 384 households across four rural kebeles in the Agarfa district, utilizing semi-structured questionnaires, dietary diversity scores, focus group discussions, key informant interviews, and field observations. Descriptive statistics and inferential methods, including t -tests and Chi-square tests, were applied alongside an econometric model using Propensity Score Matching. The findings show that while households engage in various off-farm and non-farm livelihood strategies, Farm only still constitutes over 83 % of their income. The average Shannon Entropy Index of 0.77 indicates low diversification, with 14.84 % of households experiencing low food security. PSM results demonstrate that, livelihood diversification positively impacts dietary diversity, increasing up to 14.05 % for diversified households. These findings highlight the need for policies that promote livelihood diversification to enhance food security in rural Ethiopia.