We provide new findings on 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 categorised as upward sloping with diminishing marginal effects 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 that income diversification mitigates or aggravates the impact of shocks, as shock experiences appear to negatively affect food security in spite of income diversification.
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