With growing cities and improving infrastructure all over the world, smallholder farms not only gain better access to agricultural markets but also off-farm labor markets. As a result, the opportunity cost of farm labor increases, and households' livelihood portfolios often become more complex, i.e., a share of the household labor is allocated towards off-farm activities. While such diversification is often beneficial for household incomes, the consequences for household nutrition are less clear. Especially, empirical evidence considering the interaction of different employment choices and pathways through which livelihood diversification affects nutrition is still scarce. To address this gap, we first develop a conceptual framework that considers subsistence agricultural production, commercialized agricultural operations, off-farm employment, and the role of market access in explaining household nutrition. Then, we use panel data from the rural-urban interface (RUI) of Bangalore in South India and apply a fixed-effects regression framework to analyze how employment choices affect household consumption of calories, protein, fat, saturated fat, carbohydrates, total sugar, and sodium. We also explore whether the observed effect patterns are driven by income or lifestyle changes associated with livelihood diversification. Our analysis shows that households in the RUI of Bangalore on average consume excess quantities of nutrients considered, indicating the onset of dietary transition that accompanies urbanization. Commercialized agriculture and/or off-farm employment lead to a reduction in the excess consumption of nutrients. This effect is however linked to lifestyle changes, while potential income gains further increase excess consumption. Our analysis also shows that the observed reductions in nutrient consumption through lifestyle changes vary depending on a household's location in the RUI, with households located close to Bangalore displaying stronger improvements. All in all, livelihood diversification is associated with an improvement in the household nutrient consumption status mediated by lifestyle rather than income factors associated with improved market access.
