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Does Non-Farm Income Increase Farm-Household Income Inequality? Evidence from Three Continents

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  • Kimhi, Ayal

Abstract

This paper performs inequality decomposition by income sources using data from three different continents, using a unified inequality decomposition approach. Household survey data from Ethiopia, Georgia and Korea are used for this purpose, and the uniform result is that non-farm labor income is an equalizing source of income, in the sense that increasing non-farm labor income by 1% uniformly results in a lower Gini index of inequality. These results shed light on the processes that affect farm-household inequality under various geographical, economic and institutional conditions, and imply that policy directed towards non-farm income sources could not only raise rural incomes on average but also potentially reduce inequality, i.e., be pro-poor.

Suggested Citation

  • Kimhi, Ayal, 2009. "Does Non-Farm Income Increase Farm-Household Income Inequality? Evidence from Three Continents," 2009 Conference, August 16-22, 2009, Beijing, China 51433, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:51433
    DOI: 10.22004/ag.econ.51433
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    References listed on IDEAS

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    1. Anthony F. Shorrocks, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 311-326.
    2. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
    3. Chinn, Dennis L, 1979. "Rural Poverty and the Structure of Farm Household Income in Developing Countries: Evidence from Taiwan," Economic Development and Cultural Change, University of Chicago Press, vol. 27(2), pages 283-301, January.
    4. El-Osta, Hisham S. & Bernat, G. Andrew & Ahearn, Mary C., 1995. "Regional Differences in the Contribution of Off-Farm Work to Income Inequality," Agricultural and Resource Economics Review, Cambridge University Press, vol. 24(1), pages 1-14, April.
    5. Leones, J P & Feldman, S, 1998. "Nonfarm Activity and Rural Household Income: Evidence from Philippine Microdata," Economic Development and Cultural Change, University of Chicago Press, vol. 46(4), pages 789-806, July.
    6. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    7. El-Osta, Hisham S. & Bernat, G. Andrew, Jr. & Ahearn, Mary Clare, 1995. "Regional Differences In The Contribution Of Off-Farm Work To Income Inequality," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 24(1), pages 1-14, April.
    8. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
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    Cited by:

    1. Möllers, Judith & Buchenrieder, Gertrud, 2011. "Effects of Rural Non-farm Employment on Household Welfare and Income Distribution of Small Farms in Croatia," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 50(3), pages 1-19.

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