Simson Index

Diversification of livelihood activities minimizes  households’ vulnerability to shocks by
reducing income variability. Livelihoods  of  rural Bangladesh  is  encompass  both farm and non-farm activities. This study investigated the patterns and extent of diversification of livelihoods in
rural areas of Bangladesh.  The study drew a random sample of 500 rural farm households in
Bangladesh through a multi-stage random  sampling technique.  The primary data were collected
using structured  questionnaires  coupled with interview schedules  and  the data were analyzed
using  descriptive  statistics  and Simpson index.  Result revealed that  remittance contributed
highest to the household income followed by business and caste occupation, and rice farming.
Furthermore  results showed that rural Bangladeshi households have  diversified their livelihood
activities at medium level.  The  small  and  medium  landholding households  are more  likely to
diversify  their livelihoods  compared to the  functionally-landless and  large landholding
households. The implication is that non-farm employment opportunities should be  expanded  to
combat poor households’ vulnerability to shocks and income fluctuations.  It is also suggested
to give more attention to functionally-landless households for increasing and diversifying their
income.