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Measurement and Sources of Income Inequality among Rural and Urban Households in Nigeria

  • Abayomi Samuel Oyekale
  • Adetola Ibidunni Adeoti
  • Tolulope Olayemi Oyekale

Income inequality and poverty are closely related. This study decomposed income inequality in Nigeria using the Gini-decomposition, regression-based and Shapley approaches. Results show that in 2004, income inequality is higher in rural areas than in urban areas. The study also noted that employment income increases inequality while agricultural income decreases inequality. Factors suchs as urbanization, residence in the southwest zone, household size, the house head's formal education, number of time suffered from illness, engagement in a paid job, involvement in a non-farm business, formal credit and informal credit contributed to the increased income inequality. Between 1998 and 2004, income redistribution and income growth increased poverty. The study recommended that welfare enhancing programs that will benefit urban/rural poor should be identified, while better economic opportunities should be created for those in rural areas.

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Paper provided by PEP-PMMA in its series Working Papers PMMA with number 2006-20.

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Date of creation: 2006
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Handle: RePEc:lvl:pmmacr:2006-20
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  1. Ravallion, Martin, 2004. "Pro-poor growth : A primer," Policy Research Working Paper Series 3242, The World Bank.
  2. Rosenzweig, Mark R & Schultz, T Paul, 1989. "Schooling, Information and Nonmarket Productivity: Contraceptive Use and Its Effectiveness," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(2), pages 457-77, May.
  3. George Clarke & Lixin Colin Xu & Heng-fu Zou, 2003. "Finance and Income Inequality: Test of Alternative Theories," CEMA Working Papers 493, China Economics and Management Academy, Central University of Finance and Economics.
  4. Kanbur, Ravi & Lustig, Nora, 1999. "Why is Inequality Back on the Agenda?," Working Papers 127690, Cornell University, Department of Applied Economics and Management.
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