This study analyzes the ‘‘Determinants of Participating in Non-Farm Activities and its impact on the income of smallholder rural farmers in Bibugn woreda in East Gojjam, Ethiopia using cross-section data. In the course of this study, primary and secondary data were collected. Primary data were collected from 368 sample respondents using simple random sampling. Descriptive and econometric analysis was also carried out. Descriptive statistics such as standard deviation, mean and percentage were used to describe sample respondents in terms of some desirable variables. The binary logit model was used for estimation of determinants of non-farm farm activity participation of smallholder rural farmers, and the PSM (propensity score matching) model was used to analyze the impact of non-farm activity on a rural household income. The variables farmland size, family size, farm income, number of oxen, and age are significantly determining non-farm activity participation. The researcher recommends policy makers should integrate the promotion of non-farm activities with farm activity in the framework of rural development policies and strategies.

Keywords: non-farm activities, participation, household income, logit model, PSM model