What is Livelihood? Exploring Definitions and Core Concepts

Every morning, millions of people across the country head out to earn a living – a street vendor sets up a cart, a farmer walks to the fields, a software engineer logs into work. All of these activities share a common purpose: securing the means to survive and thrive. This is what we call a livelihood. While the word seems simple, the concept behind it is layered, connecting economics, society, culture, and the environment. Understanding livelihood is the first step toward understanding how communities sustain themselves and why some struggle far more than others.

Understanding livelihood
Assets and capabilities
Components of livelihood
Self-employment
Wage employment
Resource utilization
Socio-cultural aspects of livelihood
Social networks and identity
Culture and occupational choices
Challenges to livelihood
Resource scarcity and the poverty-environment nexus
Climate change and vulnerability
Other structural challenges

Understanding livelihood

At its most basic, a livelihood is the set of economic activities a person or household carries out to meet their basic needs – food, shelter, and clothing. It is the means by which people make a living and secure the resources required for daily survival and long-term security.

The most influential definition comes from researchers Robert Chambers and Gordon Conway in the early 1990s. They described a livelihood as comprising the capabilities, assets, and activities required for a means of living. This definition is powerful because it moves beyond just income. A livelihood is not only the money earned at the end of the month – it includes the skills a person has, the resources they can access, and the actual work they do.

The idea grew out of the broader study of poverty and development. According to the United Nations, a sustainable livelihood is one that can cope with and recover from unexpected shocks while enhancing current and future capabilities. In other words, a good livelihood is not just about earning today, but about being able to keep earning even when difficulties arise, such as a job loss, a poor harvest, or a sudden illness.

Assets and capabilities

The sustainable livelihoods framework, developed by the UK’s Department for International Development, organizes livelihoods around five types of “capital” or assets. These assets include human capital, social capital, natural capital, physical capital, and financial capital. Human capital covers health, education, and skills. Social capital refers to networks and relationships of trust. Natural capital includes land, water, and forests. Physical capital covers tools and infrastructure, while financial capital includes savings and credit.

Most households combine these different assets to make a living. A farmer, for example, relies on natural capital (land and water), human capital (farming knowledge), and physical capital (equipment). The mix of assets a family can access largely determines the livelihood options available to them.

Components of livelihood

A livelihood is sustained through different forms of work and the use of available resources. The three main components are self-employment, wage employment, and resource utilization. Understanding these helps explain how different groups of people earn their living.

Self-employment

In self-employment, a person owns and runs their own business, enterprise, or profit-making activity. A shopkeeper, a tailor, a small farmer, or an auto-rickshaw driver are all self-employed. This component is especially significant given that around 51% of workers are self-employed, mostly in rural areas, while only about 15.6% have salaried employment.

Self-employment is often the only viable option in areas where formal jobs are scarce. To support it, the government promotes Self-Help Groups (SHGs) that organize the poor and build their capacity to start small enterprises. Schemes like the Pradhan Mantri Mudra Yojana provide collateral-free loans to encourage self-employment among first-time entrepreneurs.

Wage employment

In wage employment, a worker is employed by an employer – whether a private company, a public enterprise, or the government – and receives wages in return for their labour. This includes both skilled salaried positions and casual manual work.

One of the largest wage employment programmes in the world is the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Launched in 2005, it aims to provide 100 days of guaranteed wage employment each financial year to rural households whose adult members volunteer for unskilled manual work. This programme is particularly important during lean agricultural seasons when farming work dries up and families need an alternative source of income.

Resource utilization

The third component is resource utilization – how effectively people use the natural and physical resources available to them. A fisherman depends on water bodies, a farmer on fertile soil, and a forest-dwelling community on forest produce. The ability to access and sustainably manage these resources directly shapes the strength of a livelihood.

This is why resource management sits at the heart of livelihood thinking. When natural resources are abundant and well managed, livelihoods flourish. When they are degraded or unfairly distributed, livelihoods weaken. Government missions such as the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission and the National Urban Livelihoods Mission try to strengthen all three components by combining skill development, credit access, and self-employment support for poor households in both rural and urban areas.

Socio-cultural aspects of livelihood

A livelihood is not purely an economic matter. It is deeply shaped by social and cultural factors that influence a person’s ability to earn and sustain themselves. Two people with the same skills may have very different opportunities because of their social position.

In the social sciences, the concept of livelihood expands to include social and cultural means – described as the command an individual, family, or social group has over income and bundles of resources that can be used or exchanged to satisfy needs. This means relationships, community membership, and social standing are themselves livelihood resources.

Social capital – the networks, kinship ties, and relationships of trust a person belongs to – can open or close doors. A trader who is well connected in a local market has an advantage over a newcomer. A worker from a community with strong professional networks finds jobs more easily. These connections are as real to a livelihood as money or tools.

Factors such as caste, gender, and community also play a major role. Researchers have noted that men and women often have differential access to and control over assets, meaning they face different challenges in creating and maintaining sustainable livelihoods. As a result, women and men may adopt entirely different livelihood strategies. Women’s livelihood efforts are frequently tied to struggles to transform social identities and relationships, not just to earn income.

Culture and occupational choices

Cultural traditions often determine what kind of work people do. Certain crafts, trades, and skills are passed down through families and communities over generations. Traditional weaving, pottery, and metalwork are examples where livelihood and cultural identity are tightly bound together. Festivals, religious practices, and community customs also influence patterns of work, spending, and saving. Recognizing these socio-cultural dimensions is essential, because a livelihood programme that ignores local culture is far less likely to succeed.

Challenges to livelihood

Securing a stable livelihood is becoming harder for many people, especially in developing economies. A central challenge is resource scarcity – the shrinking availability of essential natural resources like water, land, and forests on which so many livelihoods depend.

Resource scarcity and the poverty-environment nexus

The link between poverty and environmental damage is so strong that it has a name: the “poverty-environment nexus.” The degradation of natural resources such as water, land, and forests worsens the economic conditions of the poor who rely heavily on these resources, creating a vicious cycle of environmental decline and economic hardship.

This challenge is severe in water-stressed regions. Despite having only a small share of the world’s freshwater, the country supports a vast population, making it one of the most water-stressed nations, with around 600 million people experiencing water stress. When water becomes scarce, agriculture suffers first, and with it the livelihoods of millions of farmers.

Climate change and vulnerability

Climate change multiplies these pressures. According to the World Bank, without strong action, more than 130 million people in the most vulnerable countries could be pushed into extreme poverty by 2030. The reason is that the poorest people are often the most exposed. Roughly 70% of the world’s poor depend on natural resources for all or part of their livelihoods, so when droughts, floods, or erratic rainfall strike, their entire means of living is at risk.

The Intergovernmental Panel on Climate Change has warned that even moderate climate change will lead to a further erosion of livelihood security in vulnerable regions, interacting with humanitarian crises such as displacement and forced migration. Farmers, fishers, and herders who depend directly on the environment bear the heaviest burden.

Other structural challenges

Beyond resource scarcity, livelihoods face several structural problems. The large share of informal and casual work means many people lack job security, fixed wages, or social protection. Skill gaps prevent workers from moving into better-paying jobs. Rapid urbanization is shifting people away from farming – survey data has recorded millions of farmers leaving their farms and transitioning to sectors such as construction in recent decades. This occupational shift creates new opportunities but also exposes workers to new forms of insecurity in crowded cities.

These challenges explain why livelihood programmes increasingly focus on building resilience – the capacity to absorb shocks and bounce back – rather than just creating jobs. A livelihood that cannot survive a bad year is not truly secure, no matter how much it earns in good times.

What do you think? If a livelihood depends not just on income but on assets, social networks, and a healthy environment, which of these do you think is hardest for a poor household to build or protect? And as more people move from farms to cities, how should livelihood support programmes change to keep up?

References

PDF 📄

What is Livelihood? Exploring Definitions and Core Concepts

Table of Contents

Understanding livelihood 🔗

Assets and capabilities 🔗

Components of livelihood 🔗

Self-employment 🔗

Wage employment 🔗

Resource utilization 🔗

Socio-cultural aspects of livelihood 🔗

Social networks and identity 🔗

Culture and occupational choices 🔗

Challenges to livelihood 🔗

Resource scarcity and the poverty-environment nexus 🔗

Climate change and vulnerability 🔗

Other structural challenges 🔗