Sufficient time has elapsed since agricultural sector reforms got underway in Ghana and
so this study examines how some selected proxies of the reforms have changed overtime and
evaluates their relative importance in influencing rural livelihood diversification and household
welfare. In doing this, the paper pools data from the 1991/1992 and 2005/2006 Ghana Living
Standards Survey (GLSS) and employs the endogenous switching regression technique. We find
that diversified households and less diversified households differ significantly in terms of
variables related to household assets, markets and institutions. Both household welfare and rural
non-farm diversification decisions are mostly driven by household assets including good health,
education, and household age composition. Households who live in communities with access to
fertilizers, public transports and local produce markets are more likely to engage in non-farm
diversification and enjoy improved welfare. The importance of access to TV and radio as
effective mass media tools in influencing household behavior is underscored in the analysis.
Targeting interventions that enhance livelihood diversification would ultimately have a positive
impact on household welfare.