Does Non-farm Income Improve or Worsen Income Inequality? Evidence from Rural Ghana

2017-12-17 15:49:00 Viewed: 566 Downloads: 104
  • Does Non-farm Income Improve or Worsen Income Inequality? Evidence from Rural Ghana

      Bernardin Senadza

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    Pub: 2017-12-17 15:49:00

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  • This paper uses nationally representative household survey data of 2006 to examine the effect of non-farm income on income inequality in rural Ghana. Employing the Gini-decomposition technique, results indicate that aggregate non-farm income increased income inequality among rural households in Ghana. In terms of its components, while non-farm self-employment income reduced income inequality, non-farm wage income increased income inequality. A factordecomposition of inequality revealed that education is the single most important variable contributing to the inequality-increasing nature of non-farm income. The effect of education on inequality is more pronounced for non-farm wage income. The policy implication is for a narrowing of education inequality among rural households in Ghana to create greater access to non-farm employment to reduce rural income inequality and poverty.

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  • Keywords

    Ghana


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