Households in Cambodia derive their income mainly from non-farm self-employment, salaries
and wages, agricultural crops and other activities. On average, non-farm self-employment
income amounts to 29 percent of total income, but its share was largest during the oil and
food price increases and the global financial crisis that occurred in 2008 and 2009. However,
household participation rates in non-farm self-employment during the crisis were exactly the
same as in 2007 and two percentage points lower than in 2010. This suggests that households
engaged in non-farm self-employment are likely to gain more benefit during income shocks,
which appears to contradict the perception of non-farm self-employment as an insurance
strategy (Lay et al. 2009)—particularly when households face income shocks for which they
are unable to compensate with labour.
Phnom Penh and other urban areas seem to depend on only two primary sources of
income, self-employment and wage labour, while rural households rely mostly on agriculture,
but self-employment and wage labour are also important. The lowest quintile of households
relies on wage labour and agricultural crops rather than non-farm self-employment. In contrast,
the highest quintile of households derives a higher share of their income from non-farm selfemployment.
More than 60 percent of the highest quintile participated in non-farm selfemployment,
while the corresponding figure in the lowest quintile was only 20 percent. This
inactivity in the non-farm self-employment sector largely reflects a lack of entrepreneurship
and/or education. This finding is consistent with the recent study by Rahut and Micevska Scharf
(2012), who confirm that education plays a major role in access to the non-agricultural sector
and reducing poverty in Cambodia.