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Sources of income inequality in rural Pakistan : a decomposition analysis

  • Adams, Richard H. Jr.
  • Alderman, Harold

Using panel data from a three-year study of 727 households, the authors identify the sources of income inequality in rural Pakistan. First, theydecompose total rural income among five sources: agricultural, livestock, rental, nonfarm, and transfer income. This decomposition shows that agricultural income contributes most to inequality in total rural income. Next, they decompose the sources of inequality in agricultural income. This leads to the surprising finding that inequitable ownership of land is not the main source of inequality in agricultural income. Income from returns to labor and crop profits contribute most to this area of inequality. One way to reduce rural income inequality might be to find more ways to narrow the disparities between abilities, perhaps by teaching more managerial and technical skills to agriculturists. According to the authors, policy makers concerned about inequality in rural Pakistan would also be well advised to pay more attention to livestock. Income from livestock apparently decreases the inequalities in income.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 836.

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Date of creation: 31 Jan 1992
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Handle: RePEc:wbk:wbrwps:836
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  1. Glewwe, Paul, 1986. "The distribution of income in Sri Lanka in 1969-1970 and 1980-1981 : A decomposition analysis," Journal of Development Economics, Elsevier, vol. 24(2), pages 255-274, December.
  2. Quan, Nguyen T., 1989. "Concentration of income and land holdings : Prediction by latent variables model and partial least squares," Journal of Development Economics, Elsevier, vol. 31(1), pages 55-76, July.
  3. Hans De Kruijk, 1987. "Sources of Income Inequality in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 26(4), pages 659-672.
  4. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-56, February.
  5. Pyatt, Graham & Chen, Chau-nan & Fei, John, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 451-73, November.
  6. von Braun, Joachim & Pandya-Lorch, Rajul, 1991. "Income sources of malnourished people in rural areas: Microlevel information and policy implications," IFPRI working papers 5, International Food Policy Research Institute (IFPRI).
  7. Fields, Gary S, 1979. "Income Inequality in Urban Colombia: A Decomposition Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(3), pages 327-41, September.
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