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Sources of income inequality in rural Pakistan : a decomposition analysis

Author

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

Abstract

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.

Suggested Citation

  • Adams, Richard H. Jr. & Alderman, Harold, 1992. "Sources of income inequality in rural Pakistan : a decomposition analysis," Policy Research Working Paper Series 836, The World Bank.
  • Handle: RePEc:wbk:wbrwps:836
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    References listed on IDEAS

    as
    1. 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).
    2. repec:pje:journl:article1982winii is not listed on IDEAS
    3. 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.
    4. 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 327-341, September.
    5. Graham Pyatt & Chau-nan Chen & John Fei, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, Oxford University Press, vol. 95(3), pages 451-473.
    6. John C. H. Fei & Gustav Ranis & Shirley W. Y. Kuo, 1978. "Growth and the Family Distribution of Income by Factor Components," The Quarterly Journal of Economics, Oxford University Press, vol. 92(1), pages 17-53.
    7. 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.
    8. 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.
    9. 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.
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    Citations

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    Cited by:

    1. Taylor, J. Edward & Mora, Jorge & Adams, Richard H., Jr. & Lopez-Feldman, Alejandro, 2005. "Remittances, Inequality and Poverty: Evidence from Rural Mexico," Working Papers 60287, University of California, Davis, Department of Agricultural and Resource Economics.
    2. Reardon, Thomas, 1997. "Using evidence of household income diversification to inform study of the rural nonfarm labor market in Africa," World Development, Elsevier, vol. 25(5), pages 735-747, May.
    3. Shams, Khadija, 2012. "Income inequality in rural Pakistan-sources and decompositions," MPRA Paper 39318, University Library of Munich, Germany.
    4. Estudillo, Jonna P. & Quisumbing, Agnes R. & Otsuka, Keijiro, 2001. "Income distribution in rice-growing villages during the post-Green Revolution periods: the Philippine case, 1985 and 1998," Agricultural Economics, Blackwell, vol. 25(1), pages 71-84, June.
    5. Barrett, Christopher B. & Reardon, Thomas, 2000. "Asset, Activity, And Income Diversification Among African Agriculturalists: Some Practical Issues," Working Papers 14734, Cornell University, Department of Applied Economics and Management.
    6. Puja Guha, 2014. "Economics of Migration and Remittances: A Review Article," Working Papers id:5618, eSocialSciences.
    7. Felix Naschold, 2009. "Microeconomic Determinants of Income Inequality in Rural Pakistan," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 746-768.
    8. repec:ags:iwmibc:158005 is not listed on IDEAS
    9. Zsoka Koczan & Franz Loyola, 2018. "How Do Migration and Remittances Affect Inequality? A Case Study of Mexico," IMF Working Papers 18/136, International Monetary Fund.
    10. Alarcon, Diana & McKinley, Terry, 1997. "The rising contribution of labor income to inequality in Mexico," The North American Journal of Economics and Finance, Elsevier, vol. 8(2), pages 201-212.
    11. Richard H. Adams, JR., 1993. "Non-farm Income and Inequality in Rural Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 1187-1198.
    12. Estudillo, Jonna P. & Quisumbing, Agnes R. & Otsuka, Keijiro, 2001. "Income distribution in rice-growing villages during the post-Green Revolution periods: the Philippine case, 1985 and 1998," Agricultural Economics, Blackwell, vol. 25(1), pages 71-84, June.
    13. Hari Ram Lohano, 2009. "Poverty Dynamics in Rural Sindh, Pakistan," Working Papers id:2334, eSocialSciences.
    14. Alderman, Harold & Garcia, Marito, 1993. "Poverty, household food security, and nutrition in rural Pakistan:," Research reports 96, International Food Policy Research Institute (IFPRI).
    15. Taylor, J. Edward & Mora, Jorge, 2006. "Does migration reshape expenditures in rural households? Evidence from Mexico," Policy Research Working Paper Series 3842, The World Bank.

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