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This paper assembles data at the all-India level and for the village of Palanpur, Uttar Pradesh, to document the growing importance, and influence, of the non-farm sector in the rural economy between the early 1980s and late 2000s. The suggestion from the combined National Sample Survey and Palanpur data is of a slow process of non-farm diversification, whose distributional incidence, on the margin, is increasingly pro-poor. The village-level analysis documents that the non-farm sector is not only increasing incomes and reducing poverty, but appears as well to be breaking down long-standing barriers to mobility among the poorest segments of rural society. Efforts by the government of India to accelerate the process of diversification could thus yield significant returns in terms of declining poverty and increased income mobility. The evidence from Palanpur also shows, however, that at the village-level a significant increase in income inequality has accompanied diversification away from the farm. A growing literature argues that such a rise in inequality could affect the fabric of village society, the way in which village institutions function and evolve, and the scope for collective action at the village level. Failure to keep such inequalities in check could thus undermine the pro-poor impacts from the process of structural transformation currently underway in rural India.

Income inequality --- Income mobility --- Inequality --- Labor Markets --- Non-farm employment --- Poverty --- Poverty Reduction --- Regional Economic Development --- Rural diversification --- Rural Poverty Reduction --- Village study

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Off-farm income constitutes a significant share of the household livelihood portfolios across Sub-Saharan Africa. Yet, the determinants and dynamics of individuals' participation in off-farm employment activities have not received adequate attention due to the weaknesses in individual-level data collection and the lack of longitudinal studies. This paper uses national panel household survey data from Ethiopia, Malawi, Nigeria, Tanzania, and Uganda; provides empirical evidence on individual-level off-farm (wage and self) employment participation rates; analyzes the extent and drivers of entry into off-farm employment and continued employment; and conducts the analysis by gender and rural/urban location. A significant share of the rural and urban working-age individual population is found to participate in off-farm employment, ranging at the national level from 34 percent in Ethiopia to 58 percent in Malawi. Men participate in wage and self-employment to a significantly greater extent compared with women across time as well as within and across countries, apart from women's participation in non-farm enterprises being more common in Nigeria and Tanzania. The population weighted cross-country gender difference in off-farm employment stands at 9 percentage points, but this has declined over time in most countries. A substantial share of the population, amounting to about 39 million individuals across the five countries, is estimated to have entered and exited employment between 2010 and 2016, pointing to the dynamic nature of off-farm employment. Drivers of entry into off-farm employment and continued employment are country- and gender-specific, with demographic factors, occurrence of shocks, and job characteristics emerging as the most important determinants.

Employment --- Employment and Unemployment --- Gender --- Gender and Development --- Gender Gap --- Inequality --- Labor Markets --- Labor Mobility --- Non-Farm Employment --- Off-Farm Employment --- Poverty Reduction --- Social Protections and Labor --- Wages --- Wages Compensation and Benefits --- Youth