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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
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    File URL: http://purl.umn.edu/51433
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    References listed on IDEAS

    as
    1. Anthony F. Shorrocks, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 311-326.
    2. 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(01), pages 1-14, April.
    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. 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.
    5. 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), April.
    6. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
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