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This article attempts to understand how the processes of livelihood diversification have affected the well-being of households in the state of Jammu and Kashmir. The article makes use of primary data to realise the objective at hand. The regression analysis suggests that diversity increases household earnings despite the location. Those residents who have higher education and more tendency to take risk have positive effect on household average earnings, while less number of working members in the household, scheduled caste (SC) and female-headed households have a negative effect on earnings. The study indicates the need to create a favourable environment for dynamic diversification of the rural economy in the state. JEL CLASSIFICATION: Q, Q 00
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