Abstract:
The poverty prevailing estate sector is of great importance to the Sri Lankan economy and it should
be a source of lesson to other sectors in Sri Lanka. Estate poverty could generally be reduced by
diversifying income portfolio of estate households. Although, poverty is a major determinant of
income diversification, it is very important to study the household level determinants of income
diversification. By taking representative sample of 298 households using cluster sampling technique,
this study attempts to find household level determinants of income diversification of tea estate
households in Badulla district of Sri Lanka. The data for the study come from a primary survey
carried out in 5 tea estates. Tobit Model was used to find the determinants. Moreover, Shannon
Equitability Index was used to measure the overall diversity while a Tobit Model was estimated to
find the determinants of overall diversity. This study finds that tea estates households in Badulla
district are mainly involved in three broad income generating activities. Those are estate income,
other agricultural income and non-agricultural income.72.48% of estates households generate their
income from the non-agricultural activities. It is the highest income activity among the major income
activities.71.47 and 23.82% from total households generate their income respectively by estate
income and other agricultural activities. The study concludes that overall diversity of income is very
low in the estate households and education level of the household heads play a major role in
diversifying into non-agricultural activities. Working age population is the major determinant to
diversify the income into non-agricultural activities other than estate income.
