Regina Neudert, Naiba Allahverdiyeva, Niyaz Mammadov, Alexandre Didebulidze, Volker Beckmann

• Diversified livelihoods combining farming, livestock keeping and non-farm income arecharacteristic of many rural households worldwide. For the Central Asian and Caucasian region,livestock keeping is especially important in terms of land use and socio-cultural heritage. We contributeto the literature with data from the under-researched Caucasus region and investigate: (i) the extent ofdiversification in smallholder households; (ii) the role of livestock keeping in diversification; (iii) theinfluence of household-specific and location-specific variables and diversification on householdincome. Based on a dataset of 303 households, we calculate contribution margins for the mainagricultural activities, household income, and diversification indices and analyze the influence ofdiversification, asset and location variables on household income with a regression model. Householdincome is generally diversified and a combination of four income sources (crops, livestock, poultry/beesand social benefits) was the most frequent. The econometric analysis shows that higher householdincomes are positively correlated with higher household land and livestock assets, the presence ofnon-farm work and social benefit income sources and with an increasing specialization as measuredby the diversification index. For enhancing rural household incomes and slowing down rural-urbanmigration, the development of non-farm job opportunities is recommended.