IDEAS home Printed from https://ideas.repec.org/a/spr/snbeco/v1y2021i11d10.1007_s43546-021-00158-2.html
   My bibliography  Save this article

Determinants of income inequality among urban households in Ethiopia: a case of Nekemte Town

Author

Listed:
  • Gemechis Teshome

    (Jimma University)

  • Leta Sera

    (Jimma University)

  • Amsalu Dachito

    (Jimma University)

Abstract

This study was aimed to investigate the determinants of income inequality among Urban households of Nekemte Town of Ethiopia by decomposing it across subgroups of the population. Accordingly, 275 households have been drawn using a stratified sampling method, while kebele (smallest administrative unit) has been taken as a stratum. Household expenditure per adult equivalent was used as a proxy for income inequality. Inequality situation and decomposition analysis by population subgroups were performed using Distributive Analysis Stata Package (DASP) to within and between subgroups components inequality relative contribution. Furthermore, Ordinary Least Square (OLS) and Quintile Regression (QR) Models were applied for econometric analysis. High inequality relative contribution was due to the ‘between subgroups inequality relative contribution’ of housing condition subgroups, education levels, age, family size and occupational types of subgroups, respectively. Likewise, high inequality relative contribution was due to ‘the within subgroups inequality relative contribution’ of marital status, gender and remittance of subgroups, respectively. On the other hand, the QRM result confirmed that age, gender, education level, marital status, family size, dependency, occupation, housing condition and remittances were the major determinants of income inequality in the study area. The implication is that government and development actors need to intervene through family planning, empowerment of women in productive activities, providing better quality and access to higher education, ensuring better access to housing infrastructure and transforming self-employment to address the causes of income inequality in the study area.

Suggested Citation

  • Gemechis Teshome & Leta Sera & Amsalu Dachito, 2021. "Determinants of income inequality among urban households in Ethiopia: a case of Nekemte Town," SN Business & Economics, Springer, vol. 1(11), pages 1-21, November.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:11:d:10.1007_s43546-021-00158-2
    DOI: 10.1007/s43546-021-00158-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s43546-021-00158-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s43546-021-00158-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Angus Deaton & Christina Paxson, 1997. "The effects of economic and population growth on national saving and inequality," Demography, Springer;Population Association of America (PAA), vol. 34(1), pages 97-114, February.
    2. Altunbaş, Yener & Thornton, John, 2019. "The impact of financial development on income inequality: A quantile regression approach," Economics Letters, Elsevier, vol. 175(C), pages 51-56.
    3. Giray Gozgor & Priya Ranjan, 2017. "Globalisation, inequality and redistribution: Theory and evidence," The World Economy, Wiley Blackwell, vol. 40(12), pages 2704-2751, December.
    4. Lambert, Peter J & Aronson, J Richard, 1993. "Inequality Decomposition Analysis and the Gini Coefficient Revisited," Economic Journal, Royal Economic Society, vol. 103(420), pages 1221-1227, September.
    5. Aswini Kumar Mishra & Anil Kumar, 2018. "What lies behind income inequality and income mobility in India? Implications and the way forward," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 45(9), pages 1369-1384, August.
    6. Biwei Su & Almas Heshmati, 2013. "Analysis Of The Determinants Of Income And Income Gap Between Urban And Rural China," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 1-29.
    7. Sergio Rey & Richard Smith, 2013. "A spatial decomposition of the Gini coefficient," Letters in Spatial and Resource Sciences, Springer, vol. 6(2), pages 55-70, July.
    8. Thelma R. Paris & Valerien O. Pede & Joyce S. Luis & Justin D. McKinley, 2012. "Determinants of Household Income: A Quantile Regression Approach for Four Rice-Producing Areas in the Philippines," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 9(2), pages 65-76, December.
    9. Jong-Wha Lee & Hanol Lee, 2018. "Human capital and income inequality," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 23(4), pages 554-583, October.
    10. Zelda Okatch & Abu Siddique & Anu Rammohan, 2013. "Determinants of Income Inequality in Botswana," Economics Discussion / Working Papers 13-15, The University of Western Australia, Department of Economics.
    11. Florence Jaumotte & Subir Lall & Chris Papageorgiou, 2013. "Rising Income Inequality: Technology, or Trade and Financial Globalization?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(2), pages 271-309, June.
    12. Murray Leibbrandt & Arden Finn & Ingrid Woolard, 2012. "Describing and decomposing post-apartheid income inequality in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 29(1), pages 19-34, March.
    13. Michael R.M. Abrigo & Sang-Hyop Lee & Donghyun Park, 2018. "Human Capital Spending, Inequality, and Growth in Middle-Income Asia," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(6), pages 1285-1303, May.
    14. Darvas, Zsolt, 2019. "Global interpersonal income inequality decline: The role of China and India," World Development, Elsevier, vol. 121(C), pages 16-32.
    15. Paweenawat, Sasiwimon Warunsiri & McNown, Robert, 2014. "The determinants of income inequality in Thailand: A synthetic cohort analysis," Journal of Asian Economics, Elsevier, vol. 31, pages 10-21.
    16. P�ter F�ldv�ri & Bas van Leeuwen, 2011. "Should less inequality in education lead to a more equal income distribution?," Education Economics, Taylor & Francis Journals, vol. 19(5), pages 537-554, February.
    17. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    18. Elsa Tesfazghi & J. Martinez & J. Verplanke, 2010. "Variability of Quality of Life at Small Scales: Addis Ababa, Kirkos Sub-City," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 98(1), pages 73-88, August.
    19. Jonathan Haughton & Shahidur R. Khandker, 2009. "Handbook on Poverty and Inequality," World Bank Publications - Books, The World Bank Group, number 11985.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Canh, Nguyen Phuc & Schinckus, Christophe & Thanh, Su Dinh & Hui Ling, Felicia Chong, 2020. "Effects of the internet, mobile, and land phones on income inequality and The Kuznets curve: Cross country analysis," Telecommunications Policy, Elsevier, vol. 44(10).
    2. Al Mamun (a) and MD. Arfanuzzaman (b), 2020. "The Effects of Human Capital and Social Factors on the Household Income of Bangladesh: An Econometric Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(3), pages 29-49, September.
    3. Nguyen, Canh Phuc & Nasir, Muhammad Ali, 2021. "An inquiry into the nexus between energy poverty and income inequality in the light of global evidence," Energy Economics, Elsevier, vol. 99(C).
    4. Onur Özdemir, 2023. "The determinants of income distribution: the role of progress in human capital," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(5), pages 4193-4227, October.
    5. Amparo Castelló-Climent & Rafael Doménech, 2020. "Global | Desigualdad de la renta y de capital humano revisitadas [Global | Human capital and income inequality revisited]," Working Papers 20/17, BBVA Bank, Economic Research Department.
    6. Nahid Farnaz, 2023. "Does Financial Development Relieve or Exacerbate Income Inequality? A Quantile Regression Approach," Economics Discussion Paper Series 2311, Economics, The University of Manchester.
    7. Koh, Sharon G. M. & Lee, Grace H. Y. & Siah, Audrey K. L., 2022. "The Resurgence of Income Inequality in Asia-Pacific: The Role of Trade Openness, Educational Attainment and Institutional Quality," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(3), pages 11-27.
    8. ETUDAIYE-MUHTAR Oyebola Fatima, 2024. "Financial Inclusion And Income Inequality In Nigeria," Management of Sustainable Development, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 16(1), pages 75-87, June.
    9. Jabłoński Łukasz, 2019. "Inequality in Economics: The Concept, Perception, Types, and Driving Forces," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 27(1), pages 17-43, March.
    10. Roger Alejandro Banegas Rivero & Marco Alberto Nu ez Ramirez & Jorge Salas Vargas & Luis Fernando Escobar Caba & Sacnict Valdez del R o, 2019. "Landlocked Countries, Natural Resources and Growth: The Double Economic Curse Hypothesis," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 113-124.
    11. Isaiah Juma Maket & Izabella Szakálné Kano & Zsófia Boglárka Vas, 2023. "Reverse Causal Nexus between Pro‐Poor Policies and Income Inequality in Kenya," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(6), pages 1163-1181, August.
    12. Takahiro Akita, 2024. "Educational Expansion and Educational Inequality," Working Papers EMS_2024_02, Research Institute, International University of Japan.
    13. Zelinsky, Tomas, 2014. "Chudoba a deprivácia na Slovensku: Metodologické aspekty a empíria [Poverty and Deprivation in Slovakia: Methodological Aspects and Empirics]," MPRA Paper 76868, University Library of Munich, Germany.
    14. Miguel A. Márquez & Elena Lasarte & Marcelo Lufin, 2019. "The Role of Neighborhood in the Analysis of Spatial Economic Inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(1), pages 245-273, January.
    15. Manea, Roxana Elena & Piraino, Patrizio & Viarengo, Martina, 2023. "Crime, inequality and subsidized housing: Evidence from South Africa," World Development, Elsevier, vol. 168(C).
    16. Cesaroni, T. & D'Elia, E. & De Santis, R., 2019. "Inequality in EMU: is there a core periphery dualism?," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).
    17. Hrushikesh Mallick & Mantu Kumar Mahalik & Hemachandra Padhan, 2020. "Does globalization exacerbate income inequality in two largest emerging economies? The role of FDI and remittances inflows," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(4), pages 443-480, December.
    18. Jianxu Liu & Xiaoqing Li & Shutong Liu & Sanzidur Rahman & Songsak Sriboonchitta, 2022. "Addressing Rural–Urban Income Gap in China through Farmers’ Education and Agricultural Productivity Growth via Mediation and Interaction Effects," Agriculture, MDPI, vol. 12(11), pages 1-23, November.
    19. Philipp Heimberger, 2019. "Beeinflusst die ökonomische Globalisierung die Einkommensungleichheit? Eine Meta-Analyse," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 45(4), pages 497-529.
    20. Bolarinwa, Segun Thompson & Akinlo, Anthony Enisan, 2021. "Is there a nonlinear relationship between financial development and income inequality in Africa? Evidence from dynamic panel threshold," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:snbeco:v:1:y:2021:i:11:d:10.1007_s43546-021-00158-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.