We provide new findings of rural livelihood diversification in Nigeria, using panel data from
the Living Standards Measurement Study – Integrated Surveys on Agriculture (LSMS-ISA). To a
large extent, the patterns and the implications of livelihood diversification have been
analysed using cross sectional data and a narrow definition of food security in previous
studies. In some cases, analysis has been conducted in the absence of shock experiences.
We find that some results about the determinants of income diversification in cross sectional
analysis also hold true in the panel data setting, while others are only revealed due to the
panel nature of the data set. We find that the relationship between wealth and income
diversification in rural Nigeria is best categorized as upward sloping with diminishing marginal
effect rather than a U shape or an inverted U shape as found in previous studies. We also find
that income diversification favours food accessibility, food availability and food utilisation,
and therefore resilience capacities overall. We do not find any evidence of income
diversification in mitigating or aggravating the impact of shocks, as shock experiences
appear to negatively affect food security in spite of income diversification.
