Nonfarm Activity and Rural Income Inequality : A Case Study of Two Provinces in China

Nonfarm activity plays an increasingly important role in rural household income. Based on data from the Living Standards Measurement Study in the provinces of Hebei and Liaoning, the authors study the distribution of nonfarm income in rural China. First, they assume nonfarm income as an exogenous transfer to total income to decompose the Gini index. Second, they assume nonfarm income as a potential substitute for farm income to take household choices into account and simulate household income. The results show that nonfarm activity reduces rural income inequality by raising the income of poor households to a larger extent than that of rich households. Improving rural infrastructure and implementing universal basic education are critical to build up the capacity of households (in particular, poor households) to participate in nonfarm activity. Strengthening the links between farm activity and nonfarm activity is essential to optimize the contribution of nonfarm activity to pro-poor rural economic development.

Bibliographic Details

Main Authors:	Zhu, Nong, Luo, Xubei
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	World Bank, Washington, DC 2006-01
Subjects:	AGRICULTURAL EXTENSION, AGRICULTURAL PRODUCTIVITY, AGRICULTURAL SECTORS, AGRICULTURAL TECHNOLOGIES, AGRICULTURAL TECHNOLOGY, AGRICULTURAL WAGE, AGRICULTURAL WAGE EMPLOYMENT, ANALYTICAL METHODS, ARABLE LAND, AVERAGE INCOME, COLLECTIVE LAND, CREDIT MARKET, DATA ENTRY, DATA QUALITY, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DROUGHT, ECONOMETRIC ANALYSIS, ECONOMIC ACTIVITY, ECONOMIC REFORMS, ECONOMIC RESEARCH, ECONOMIC WELFARE, EMPLOYMENT INCOME, EQUAL DISTRIBUTION, FARM ACTIVITIES, FARM ACTIVITY, FARM EMPLOYMENT, FARM HOUSEHOLDS, FARM INCOME, FARM OUTPUT, FARM SECTOR, FARM WORK, FARMER, FARMERS, FOOD PROCESSING, HOUSEHOLD LEVEL, HOUSEHOLD MEMBERS, HOUSEHOLD WELFARE, HOUSING, HUMAN CAPITAL, INCOME, INCOME DISTRIBUTION, INCOME EQUATION, INCOME INEQUALITY, INCOME LEVEL, INCOME SCALE, INCOME SHARE, INCOME SOURCE, INCOME SOURCES, INCOME TRANSFER, INCOMES, INEQUALITY, INEQUALITY REDUCTION, INSURANCE, INSURANCE MARKET, INSURANCE MARKETS, LABOR FORCE, LABOR MARKET, LABOR PRODUCTIVITY, LIQUIDITY CONSTRAINTS, LIVING STANDARDS, LIVING STANDARDS MEASUREMENT, NEGATIVE CORRELATION, NEGATIVE SHOCKS, NON-SAMPLING ERROR, NONFARM INCOME, NORMAL DISTRIBUTION, OBSERVED VALUE, OPPORTUNITY COST, POLICY RESEARCH, POOR, POOR HOUSEHOLDS, POSITIVE ROLE, POVERTY REDUCTION, PRIVATE TRANSFERS, PRODUCTIVE ACTIVITY, RURAL AREAS, RURAL ECONOMIC DEVELOPMENT, RURAL EMPLOYMENT, RURAL HOUSEHOLD, RURAL HOUSEHOLD INCOME, RURAL HOUSEHOLDS, RURAL INCOME, RURAL INEQUALITY, RURAL INFRASTRUCTURE, RURAL MIGRANTS, RURAL POPULATION, RURAL POVERTY, RURAL RESIDENTS, SAFETY NET, SAMPLE SIZE, SELECTION BIAS, SELF-EMPLOYMENT, SIGNIFICANT NEGATIVE, SOCIAL SECURITY, SURVEY DATA, SUSTAINABLE DEVELOPMENT, TRANSACTION COSTS, UNEMPLOYMENT, URBAN AREAS, WAGE RATES,
Online Access:	http://documents.worldbank.org/curated/en/2006/01/6525930/nonfarm-activity-rural-income-inequality-case-study-two-provinces-china http://hdl.handle.net/10986/8789
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