Sources of Income Inequality among Farm Households in Ethiopia; Using of Gin Coefficient

Author(s)

Efa Gobena Tura , Bizualem Assefa ,

Download Full PDF Pages: 14-23 | Views: 2034 | Downloads: 808 | DOI: 10.5281/zenodo.3445777

Volume 6 - August 2017 (08)

Abstract

The distribution pattern of income over years has been a major concern in the determination of the level of economic growth and development of any country. Household in rural Ethiopia are diversifying activity both within agricultural and non-agricultural sectors. The study intended to analyze sources of income inequality of cash and cereal crops farmers. Data for the study obtained from primary and secondary sources of data. About 164 respondents for cereal crops and 150 cash crops producers sampled for the study. For analysis purposes descriptive statistics, Lorenz curve and Gini coefficient were used for the study. One way ANOVA showed that there is statistical significant difference between cash and cereal crops farmers in terms of income obtained from livestock, off farm income and other farm income. The income obtained from the livestock business and other farm activities were unequally distributed among the cereal crops producers in Ethiopia. On the other hand, income obtained from non-farm activity and livestock business highly contributed for income inequality among the cereal crops producers. The Lorenz curve result showed that income inequality of cash crops producers higher than income inequality of cereal crops farmers. For both cereal and cash crops producer’s the study showed that livestock activities is small-scale, mostly free-costs which lacks modern livestock husbandry practice that could result in high productivity and yield easily. Based on the finding of the study, it is suggested that the policy makers targeting to alleviate income inequality should continue to explore options for promoting the farmers involvement in diversified farming and non-farming activity to overcome the income disparity in the country and it should be focused on value-added activities, especially on the lower income group.

Keywords

Cereal crops, cash crops, Gini Coefficient, Lorenz curve, Income 

References

  1. Adebayo, O. (2002). Sources and Measurement of Income Inequality Among Some Rural and Urban Households in Ibadan Metropolis. B.Sc. Project, Dept. of Agric. Econ, University of Ibadan,
  2. Adejare, A.A. (1999). Impact of soyabean consumption of food sufficiency in Ibadan metropolis.M.Sc Thesis, Department of Agricultural Economics, University of Ibadan, Nigeria.
  3. Agricultural Transformation progress report, 2015. Ethiopian Agricultural transformation Agency(ATA). Addis Ababa
  4. Ashebir D. and Negussie Z. (2015).  Nonfarm Income Diversification and Inequality in Eastern Ethiopia: Evidence from Gini Decomposition Analysis. Journal of Poverty, Investment and Development www.iiste.org ISSN 2422-846X Vol.18,
  5. Babatunde, R.O (2008). Income inequality in rural Nigeria: evidence from farming households survey data. Australian Journal of Basic and Applied Sciences, 2 volume 1, Pp. 134 –140.
  6. Berrebi, Z.M. and Silber, J. (1985) The Gini Coefficient and Negative Income: A Comment. Oxford Economic Papers, 37, 525-526.
  7. Burkhauser, R.V., Smeeding, T.M. and Merz, J. (1996).  Relative Inequality and Poverty in Germany and the United States Using Alternative Equivalence Scales. Review of Income and Wealth, 42, 381-400. http://dx.doi.org/10.1111/j.1475-4991.1996.tb00190.x
  8. Central Statistical Agency (CSA) (2012). Ethiopia Demographic and Health Survey 2011.Addis Ababa, Ethiopia, and Calverton, Maryland, USA: Central Statistical Agency and ICF Macro.
  9. Chen, C., Tsaur, T. and Rhai, T. (1982). The Gini Coefficient and Negative Income. Oxford                 Economic Papers, 34, 473-478.
  10. Clarke, G., L. Colin, X.H. Zou (2003). Finance and Income Inequality: Test of Alternative Theories. World Bank Policy Research Working Paper 2984, Washington D.C.: World Bank.
  11. Cornia G.A. with S. Kiiski (2001). Trend in Income Distribution in the Post World War II Periods: Evidence and Interpretation. WIDER Discussion Paper No. 89, UNU/WIDER: Helsinki.
  12. Daly, M.C. and Royer, H.N. (2000).  Cyclical and Demographic Influences on the Distribution of Income in California. Federal Reserve Bank of San Francisco, Economic Review, April, 1-13. http://www.frbsf.org/economic-research/files/article1-4.pdf
  13. Demie, A., &Zeray, N. (2015). Nonfarm Income Diversification and Inequality in Eastern Ethiopia : Evidence from Gini Decomposition Analysis, 18, 7–14.
  14. Dillon, J.L and J.B. Hardaker (1993). Farm management research for small farmer development. Rome: FAO
  15. Ellis, F. (2000).The Determinants of Rural Livelihood Diversification in Developing Countries.Journal of Agricultural Economics. 51(2):289-302.
  16. Ipinnaiye, A. O. (2001). A Decomposition Analysis of the Sources of Income Inequality in Ibadan Metropolis Unpublished B. Sc. Project Dept. of Agric. Economics, U. I.
  17. Jacobson, A.; A.D. Milman and D.M. Kammen (2007).Letting the (energy) gini out of the bottle: Lorenz curves of cumulative electricity consumption and gini coefficients as metrice of energy distribution and equity. Energy Policy 33, Pp.1825 – 1832
  18. Kolenikov , S . and A. Shorrocks (2003). A decomposition analysis of regional poverty in Russia. Discussion paper No. 2003/74. World Institute for Development Economic Research (UNU/WIDER), Helsinki.
  19. Lanjouw J.O. and Lanjouw P. (1995). Rural Nonfarm Employment: Survey.Yale University and the World Bank.World Development Report. Washington D.C.
  20. Lanjouw J.O. and Lanjouw P. (2000).The rural nonfarm sector: issues and evidence from developing countries.Agricultural Economics 26. [online] Http://www.Elsevier.com/locate/egecon.Retrieved on December 6, 2008.
  21. Lanjouw, P. and Shariff, A. (2002) Rural Non-farm Employment in India: Access, Income and Poverty Impact. Working Paper 81.National Council of Applied Economic Research, New Delhi.
  22. Lanjouw, P. and Stern, N. (1993) Agricultural change and inequality in Palanpur. In: The Economics of Rural Organization: Theory, Practice and Policy, Eds: A. Braverman, K. Hoff, and J. Stglitz. Oxford University Press, New York.
  23. Nega, F., Marysse, S., &Mathijs, E. (2014).Diversification , Income Inequality and Social Leuven, Belgium.
  24. Organization for Economic Co-Operation and Development (OECD) (2013) Framework for Statistics on the Distribution of Household Income, Consumption and Wealth. OECD Publishing, Paris.
  25. Oyekale, A., Adeoti, A.I and T.O. Ogunnupe (2006).Measurement and sources of income inequality among rural and urban households in Nigeria, University of Ibadan.PMMA working paper No. 2006-20.Retrieved from http://papers.ssrn.com/so13/cf_dev/ absbyauth.cfm.
  26. Pratap S. Birthal, Digvijay S. Negi, Awadesh K. Jha  andDhiraj Singh, (2014). Agricultural Economics Research Review Vol. 27 (No.1) January-June 2014 pp 37-48 DOI: 10.5958/j.0974-0279.27.1.003
  27. Reardon, T., Taylor, J.E., Stamoulis, K., Lanjouw, P. and Balisacan, A. (2000). ‘Effects of nonfarm employment on rural income inequality in developing countries: an investment perspective’, Journal of Agricultural Economics, 51(2): 266-288.
  28. Salimonu, K. K.,Atoyebi, J.O. and Sanusi, W.A. (2006): Income Inequality, Poverty and SocialWelfare Among Government and Private Employees in Lagos and Osun States of Nigeria. Agricultural Journal, 1 (40): 315-319
  29. Sen, A. (1994).  Rurallabour markets and poverty. Indian Journal of Labour Economics, 37(4): 575-607. Birthal, P.S. and Singh, M.K. (1995) Structure of rural income inequality: A study in western Uttar Pradesh. Indian Journal of Agricultural Economics, 50(2): 168-175.
  30. UNU/WIDER (2000). United Nations University/ World Institute for Development Economic Research, World Inequality Database, Vol. 10, Helsinki.
  31. Woldehana, T. and Oskam, A. (2001). ‘Income diversification and entry barriers: evidence from the Tigray region of northern Ethiopia’, Food Policy, 26(4): 351- 365.
  32. World Bank (2003). Development indicators for 2002.Washington DC: World Bank. Pp. 74-75

Cite this Article: