Determinant of Income Inequality in Ethiopia: Regression Based Inequality Decomposition
European Business & Management
Volume 5, Issue 3, May 2019, Pages: 42-50
Received: Jun. 12, 2019; Accepted: Jul. 10, 2019; Published: Aug. 8, 2019
Views 124      Downloads 65
Author
Gizachew Mengesha, Department of Economics, Aksum University, Aksum, Ethiopia
Article Tools
Follow on us
Abstract
Widening inequality has significant implications for growth and macroeconomic stability; it can concentrate political and decision making power in the hands of a few, lead to a suboptimal use of human resources, cause investment-reducing political and economic instability, and raise crisis risk. Despite the decline in national poverty across all measures inequality at national level in Ethiopia appeared to increase over the course of time. This studies focusing on investigating the determinant of inequality in Ethiopia by using the raw data collected from central Stastical authority based on the regression decomposition of field’s methodology. The empirical result tells the variables like years of education, age of the house hold head, residency of the head, agricultural sector and household married contribute to reduce the income inequality. The employment, the occupation and the race are also having a great contribution for the inequality of income. The policy maker should design a new way that able to benefit the female other than affirmative like reducing the passing point in exam. But giving more credit access like enat bank it’s possible to avoid the income variation between the female household head and male household head. The government should be fair interims of distributing resource among the region without any racial discrimination and should give equal infrastructure to all regions.
Keywords
Inequality, Regression Decomposition, Ethiopia
To cite this article
Gizachew Mengesha, Determinant of Income Inequality in Ethiopia: Regression Based Inequality Decomposition, European Business & Management. Vol. 5, No. 3, 2019, pp. 42-50. doi: 10.11648/j.ebm.20190503.12
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
[1]
Adams, Richard H Jr. (2001). ‘Nonfarm Income, Inequality, and Land in Rural Egypt,’ Economic Development and Cultural Change, vol. 50, pp 339-363.
[2]
Alemayehu Geda and Addis Yimer (2014), Growth, poverty and inequality in Ethiopia: 2000-2013: A Macroeconomic Appraisal, Department of Economics, Addis Ababa University.
[3]
Baye, Francis Menjo and Epo, Boniface Ngah (2011) “Inequality Decomposition by Regressed-Income Sources in Cameroon” Prepared for the Special IARIW-SSA Conference on Measuring National Income, Wealth, Poverty, and Inequality in African Countries Cape Town, South Africa, September 28-October 1, 2011.
[4]
Arne Bigsten, Karin Kronlid and Negatu Makonnen (2005) Dynamics of Income Distribution in Urban Ethiopia 1994–1997.
[5]
Atkinson, AB (1970), ‘On the Measurement of Inequality,’ Journal of Economic Theory, vol. 2, pp. 244-263.
[6]
Ayse aylin bayar (2016), the decomposition of regional inequalities of turkey Faculty of Management, Istanbul Technical University (ITU).
[7]
Bourgignon, F. and C. Morrisson (1998), ‘Inequality and Development: The Role of Dualism’, Journal of Development Economics, vol. 57, pp. 233–57.
[8]
Canagarajah, Sudharshan., Newman Constance, & Ruchira Bhattamishra (2001). “Non-Farm Income, Gender, and Inequality: Evidence from Rural Ghana and Uganda,” Food Policy, vol. 26: pp405-420.
[9]
Cesar Gallo (2002): economic growth and income inequality: theoretical background and empirical evidence, working papers no, 199.
[10]
Cowell, F. A. and Fiorio, C. V. (2009) Inequality decomposition: A reconciliation. London School of Economics, STICERD.
[11]
De Gregorio, J., & Lee, J., (2002). ‘Education and income inequality: New evidence from cross country data’. The Review of Income and Wealth, vol. 48, pp. 395-416.
[12]
DiNardo, J., N. M. Fortin, & T. Lemieux (1996). ‘Labor market institutions and the distribution of wages, 1973-1992: A semiparametric approach’, Econometrica, vol. 64, pp. 1001.1044.
[13]
Elbers, Chris., & Lanjouw, Peter., (2001), ‘Intersectoral Transfer, Growth, and Inequality in Rural Ecuador’, World Development, vol. 29, pp. 481-496.
[14]
El-Osta, Hisham, G. Andrew Bernat Jr., & Mary C. Ahearn (1995). ‘Regional Differences in the Contribution of Off-Farm Work to Income Inequality’, Agricultural and Resource Economics Review, vol. 24, pp. 1-14.
[15]
Estudillo, Jonna P., Quisumbing, Agnes R., & Keijiro Otsuka (2001), ‘Income Distribution in Rice-growing Villages During the Post-Green Revolution Periods: The Philippine Case’, 1985 and 1998.” Agricultural Economics, vol. 25, pp. 71-84.
[16]
Jenkins, Stephen P., (1995). “Accounting for Inequality Trends: Decomposition Analyses for the UK, 1971- 86” Economica, Vol. 62, No. 245 pp. 29-63.
[17]
F. Patriarca and C. Sardoni (Nov, 2011): distribution and growth: a dynamic kaleckian approach* working paper no, 697.
[18]
Fambon S. 2014Sources of Income Inequality; Emprical Evidence from Cameroon, Faculty of Economics and Management, University of Yaoundè II-Cameroon 2014.
[19]
Fields, G. (2003): Accounting for Income Inequality and Its Change: A New Method, with Application to the Distribution of Earnings in the United States', Research in Labor Economics.
[20]
Francisco Alvarez-Cuadrado Mayssun el-attar vilalta (2012): income inequality and saving discussion paper no. 7083.
[21]
Mocan, H. N. (1999), ‘Structural Unemployment, Cyclical Unemployment, and Income Inequality’, Review of Economics and Statistics, Vol. 81, No. 1, pp. 122–34.
[22]
Morduch, J. and T. Sicular (2002). Rethinking inequality decomposition, with evidence from rural China. The Economic Journal 112, 93.106.
[23]
National planning commission of Ethiopia (20015/16), Household Income and Expenditure Survey 2015/16. Addis Ababa, Ethiopia.
[24]
Podder, N and S. Chatterjee (2002), ‘Sharing the national cake it post reform New Zealand: income inequality trends in terms of income sources’, Journal of Public Economics, vol. 86, no. 1, pp. 1-27.
[25]
Ravallion, M. (2004a). Competing concepts of inequality in the globalization debate (WorldBank Policy Research Working Paper No. 3038). Washington DC: World Bank.
[26]
Shorrocks, A. F., (1982b),“The Impact of Income Components on the Distribution of Family Incomes”, Quarterly Journal of Economics, vol 98, pp. 311-26.
[27]
Silber, Jacques, (1989), “Factor Components, Population Subgroups and the Computation of the Gini Index of Inequality” The Review of Economics and Statistics, vol. 71, no. 1 pp. 107-115.
[28]
Siphambe, H. K, (2008), “Rates of return to education in Botswana: Results from the 2002/2003 household income and expenditure survey data set” South African Journal of Economics, vol. 76, iss 4, pp. 641–651, Approach’, Journal of Comparative Economics, vol. 32, pp. 348-363.
[29]
United nations development programme in ethiopia (January 2015): inclusive growth and inequalities in the context of structural.
[30]
Wan, Guanghua, and Zhangyue Zhou (2005). “Income Inequality in Rural China: Regression-Based Decomposition Using Household Data.” Review of Development Economics 9: 107-120.
ADDRESS
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
U.S.A.
Tel: (001)347-983-5186