Income Inequality among Taiwan Farm and Non-farm Households: Accounting for Income Sources and Household Size
Date Issued
2010
Date
2010
Author(s)
Shr, Yau-Huo
Abstract
Economists have long recognized the issue of income inequality. With globalization and recent changes in economic environment, this issue has become increasingly serious. In the case of Taiwan’s agricultural sector, it has been under the pressures of trade liberalization and agricultural reforms in recent decades. How the status quo may impact the welfare and income distribution of farm households needs to be examined.
Using the data of the Survey of Family Income and Expenditure in Taiwan Area of Republic of China from 1979 to 2008, the income inequality in farm households was assessed by calculating various indexes, comparing inequality between different groups of households, and using the equivalence scale to take the household size into consideration. This study also applied two inequality decomposition techniques to quantify the contributions of the household size and income sources. In the mean-time, this study evaluated the income inequality in non-farm households, and investigated the differences between farm and non-farm households.
The empirical results are summarized as follows. First, the income inequality in farm households was generally lower than that in the non-farm households after the incomes were adjusted according to an equivalence scale, and mainly influenced by high-income households. Second, although the household size raised the income inequality among farm households before 1993, the inequality in income was mostly affected by income per capita. Third, government transfer helped reduce the total income inequality in both the farm and non-farm households, whereas the farm and non-farm incomes both aggravated the income inequality. Different from the inequality of the farm households, the inequality among non-farm households was mainly affected by low-income households, and kept rising during 1979-2008. Also, it was continuously influenced by the household size.
This study also found education and age of household heads did not show significance influence in household income inequality after the income were adjusted using an equivalence scale, suggesting that the problem of welfare distribution in the households with lower-education and elder household heads was not as serious as revealed by the unadjusted inequality indexes.
Subjects
Income distribution
Gini coefficient
Equivalence scale
Factor decomposition
Government transfer
Survey of Family Income and Expenditure
Educational level
SDGs
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