Journal of Economics and Sustainable Development www.iiste.org ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.11, No.19, 2020 9 Determinant of Rural Household Participation in Non-Farm and Level of Generated Household Income from the Activities: The Case of Haramaya Woreda, East Hararghe Zone, Ethiopia Fami Abdurezak 1 Lemma Zemedu 2 Daniel Belay 3 1.MSc. Lecturer Department of Agricultural Economics, Bonga University, Ethiopia 2.Ethiopian Institute of Agricultural Research, senior researcher 3.Department of Economics, Ambo University, Ethiopia Abstract This study analyzed the determinant of rural household participation in non-farm and level of generated household income from the activities in Haramaya district, Ethiopia using cross-section data. Both primary and secondary data were collected for this study. Primary data were collected from 196 sample respondents using stratified random sampling. In this study both descriptive and econometric analysis was carried out. Descriptive statistics were applied to characterize the sample households in terms of economic, demographic and institutional factors. Heckman two stages selection model was used for estimation of determinant participation of rural households in non-farm activities and determinant level of income from non-farm activities. The result of factors affecting participation of rural households in non-farm activities indicated landholding size, use of irrigation, livestock holding and distance to nearest market negatively and significantly influenced participation while education, household size and non-farm training significant and positively affects participation of rural household in non- farm activities. In the result of determinant level of non-farm income shows that landholding size, use of irrigation, livestock holding and distance to the nearest market were significant and negatively affects level of non-farm income while household size and education status were significant and positively influenced level of non-farm income. In generally the study identified the determinant of rural household participation in non-farm activities and determinant level of income from non-farm activities. Therefore, Policy makers should integrate the promotion of non-farm activities in the framework of rural development policies and strategies. Keywords: participation, non-farm activities, household income, heckman two steps selection model DOI: 10.7176/JESD/11-19-02 Publication date:June 30th 2020 1. INTRODUCTION In most developing countries, agriculture is the mainstay and the largest economic sector for both its contribution to the GDP and generation of employment. In sub-Saharan African countries, agriculture is the major economic activity accounting for the highest share of the GDP and creates a large proportion of employment opportunities (MoARD, 2010; FAO, 2016). Despite that agriculture is being major source of income and employment in most rural areas in developing countries, it has not been able to produce sufficient food to feed their population due to small ratio of cultivated land to population (Eshetu and Mekonnen , 2016). As a result, rural households are increasingly earning their income from non-farm activities for their livelihood. Haggblade et al., (2010) found that non-farm activities contributed 35-50 percent of rural household income across sub-Saharan African countries. This indicates one possible pathway to get out of food insecurity problem in developing countries is the promotion and establishments of nonfarm employments. In Ethiopia, about 83.9 % of total populations’ inhabitants live in rural areas and the main source of their livelihood is agriculture. Agriculture become the second most dominant next to service sector of the country’s economy, by providing employment for 80 % of the total labors force and contributes 42.7 % to Gross Domestic Product and 70 percent of foreign exchange earnings (CSA, 2013; NBE, 2013). However, agriculture in the Ethiopia remains largely subsistence, production has not kept pace with population growth, food self-sufficiency has declined, the household income required to afford bought-in food has not been fulfilled. According to Abebe (2014) agricultural production in Ethiopia is dominated by subsistence- based smallholder farmers, whose production and incomes from the sector are constrained by socio-economic, institutional, resource and environmental factors. These factors generally attribute for lower productivity of the sector, which in turn forces farmers to engage in non-farm activities in order to improve their income for survive. Non-farm activities have become an important component of livelihood strategies among rural households in Ethiopia. Evidence from study by Beyene (2008) suggested that non-farm activities can play an important role in improving the well-being of the rural population. Moreover, since agricultural income is vulnerable to different shocks, getting income outside of agriculture is important for farm households (Yizengaw, 2014). For this reason, the share of non-farm income was increasing in Ethiopia. According to the study of Gagabo (2014) the share of