Determinants of income inequality among rural households of Ibadan, Oyo State, Nigeria

Researches in the last two to three decades in Nigeria point to the fact that the citizens are still embroiled in poverty despite the huge resources that had been committed to poverty alleviation programmes. Absence of articulated policy on income distribution had prevented the ‘trickling down’ of the beneficial effects of the little growth achieved over the years. This study focused on the analysis of the determinants of income inequality in rural households of Ibadan, Oyo State. Primary data was collected from 120 rural households in two local governments using questionnaire and employing a 3-stage sampling procedure. Gini coefficient was used as a measure of inequality. In addition, Shapley approach was used in decomposing the inequality index in a regression-based context to determine the contribution of the various factors. Results show that there was high inequality in the income distribution of the rural households, which was reflected in the 0.5499 Gini coefficient value. The results further reveal that education was the only inequality-decreasing factor with household size contributing most (29.8%) to increasing inequality. Marital status, land size and agricultural credit also had inequality-increasing effects with the magnitude of marital status (26.0%) being close to that of household size. Government should therefore enhance the inequality-decreasing effects of education by investing more in human capital development of the rural households.