A STUDY OF HOUSEHOLD INCOME DETERMINANTS AND INCOME INEQUALITY

 

Table Of Contents


  • <p>             <b>TABLE OF CONTENTS&nbsp;</b></p><p> LIST OF TABLES......................................................................................................................... vi&nbsp;</p><p>LIST OF FIGURES ..................................................................................................................... viii&nbsp;</p><p>

Chapter ONE

INTRODUCTION

  • </p><p>
  • 1.BACKGROUND INFORMATION ON MALIAN HOUSEHOLD INCOMES AND MOTIVATION FOR THIS STUDY............................................................................................................................................................. 1&nbsp;</p><p>
  • 1.1Purpose of Study and Research Questions.........................................................-................... 4&nbsp;</p><p>
  • 1.2Previous Studies on Household Incomes in Mali .................................................................................. 5&nbsp;</p><p>
  • 1.3Limitations of the Previous Studies on Malian Household Incomes........................................................ 7&nbsp;</p><p>
  • 1.4Structure of Thesis.................................................................................................................................. 10&nbsp;</p><p>
  • 2.LITERATURE REVIEW ............................................................................................................................ 11&nbsp;</p><p>
  • 2.1Household Income Portfolios and Livelihood Diversification ................................................................. 11&nbsp;</p><p>&nbsp;
  • 2.1Common Income Sources..................................................................................................................... 11&nbsp;</p><p>2.1.
  • 1.2Non-farm Income ............................................................................................................................. 12&nbsp;</p><p>2.1.
  • 1.3Migration Remittance Income ......................................................................................................... 13&nbsp;</p><p>2.
  • 1.2Relationship between Farm and Nonfarm Activities............................................................................ 13&nbsp;</p><p>2.
  • 1.3Reasons for Livelihood Diversification ................................................................................................ 16</p><p>&nbsp;2.1.
  • 3.1Risk Reduction................................................................................................................................ 16&nbsp;</p><p>2.1.
  • 3.2Coping after a Shock....................................................................................................................... 17&nbsp;</p><p>2.1.
  • 3.3Seasonality ..................................................................................................................................... 17&nbsp;</p><p>2.1.
  • 3.4Credit Market Failures...................................................................................................................... 17&nbsp;</p><p>2.1.
  • 3.5Asset Strategies.............................................................................................................................. 18&nbsp;</p><p>2.1.
  • 3.6Returns from Income Activities....................................................................................................... 18</p><p>&nbsp;2.
  • 1.4Determinants of Household Income .................................................................................................. 19&nbsp;</p><p>
  • 2.2Income Inequality ..................................................................................................................................... 21&nbsp;</p><p>2.
  • 2.1National-Level Income Inequality ............................................................................................................ 21</p><p>&nbsp;2.
  • 2.2Community-Level Income Inequality in Rural Areas ......................................................................... 23&nbsp;</p><p>2.
  • 2.3The Relationship between Income Sources and Community-Level Inequality.............................. 23&nbsp;</p><p>2.2.
  • 3.1Crop Income.............................................................................................................................. 23&nbsp;</p><p>2.2.
  • 3.2Nonfarm Income .................................................................................................. 25&nbsp;</p><p>2.2.
  • 3.3Livestock Income................................................................................................. 26&nbsp;</p><p>2.2.
  • 3.4Migration Remittance Income ............................................................................. 27&nbsp;</p><p><b>

Chapter THREE

RESEARCH METHODOLOGY

  • </b><br></p><p>
  • 3.DATA AND INCOME DEFINITIONS ................................................................................... 28&nbsp;</p><p>
  • 3.1Definition of Household .................................................................................................... 37&nbsp;</p><p>
  • 3.2Definitions of Income and Income Categories .................................................................. 37&nbsp;</p><p>
  • 3.3Basic Characteristics of the Surveyed Households............................................................ 39</p><p>&nbsp;
  • 3.4External Events in the Koutiala and Tominian Zones that may have Impacted Household Income Portfolios...................................................................................................................... 42</p><p><b>

Chapter FOUR

DATA PRESENTATION AND ANALYSIS

  • </b><br></p><p>&nbsp;
  • 4.HOUSEHOLD INCOME PROFILES FOR TOMINIAN AND KOUTIALA........................ 43&nbsp;</p><p>&nbsp;
  • 4.1Methodology...................................................................................................................... 43&nbsp;</p><p>
  • 4.2Average Total per Capital Income Levels .......................................................................... 44&nbsp;</p><p>
  • 4.3Household Income by Source ............................................................................................. 46&nbsp;</p><p>
  • 4.4Distribution of Income Across Household Types.............................................................. 53&nbsp;</p><p>4.
  • 4.1Distribution of Income Across Income Quartiles........................................................ 53&nbsp;</p><p>4.
  • 4.2Distribution of Income Across Landholding Quartiles................................................ 56&nbsp;</p><p>4.
  • 4.3Distribution of Income between Households Above and Below the $1/Day/Capital Poverty Line.......................................................................................................................... 59&nbsp;</p><p>
  • 4.5Discussion of the Descriptive Statistics Analysis of Household Income Portfolios in the Tominian and Koutiala Zones................................................................................................... 61&nbsp;</p><p><b>

Chapter FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

  • </b><br></p><p>
  • 5.DETERMINANTS OF HOUSEHOLD INCOME.................................................................. 63</p><p>&nbsp;
  • 5.1Methodology...................................................................................................................... 63&nbsp;</p><p>
  • 5.2Factors Correlated with a Higher Probability of Participation and Higher Income Levels Earned from Livestock, Nonfarm, and Cropping Income Activities........................................ 72&nbsp;</p><p>5.
  • 2.1Livestock Income......................................................................................................... 73&nbsp;</p><p>5.
  • 2.2Nonfarm Income .......................................................................................................... 77&nbsp;</p><p>5.
  • 2.3Crop Income................................................................................................................. 81&nbsp;</p><p>
  • 5.3Discussion of the Results from the Econometric Analysis of Household Income Determinants in the Tominian and Koutiala Zones.................................................................. 83&nbsp;</p><p><b>CHAPTER SIX</b><br></p><p>
  • 6.COMMUNITY INCOME INEQUALITY AND INCOME SOURCES................................. 86&nbsp;</p><p>
  • 6.1Methodology...................................................................................................................... 86&nbsp;</p><p>
  • 6.2Results................................................................................................................................ 90&nbsp;</p><p>
  • 6.3Discussion of the Gini Decomposition Results ................................................................. 96&nbsp;</p><p><b>CHAPTER SEVEN</b><br></p><p>
  • 7.CONCLUSIONS...................................................................................................................... 98&nbsp;</p><p>
  • 7.1Limitations of this Study.................................................................................................. 101&nbsp;</p><p>
  • 7.2Future Research ................................................................................................................ 102&nbsp;</p><p>APPENDICES ............................................................................................................................ 103</p><p>&nbsp;Appendix A: Method for Calculating Households Living Above and Below the $1/day Poverty Line ......................................................................................................................................... 104</p><p>&nbsp;Appendix B: Real per Capital Income from Various Sources, Including F-Tests to Determine Statistical Significance of the Income Differences found between Survey Years (in 2010 Franc CFA) ....................................................................................................................................... 106</p><p>&nbsp;Appendix C: Real per Capital Income from Various Sources, Including T-Tests to Determine Statistical Significance of the Income Differences found between Zones (in 2010 Franc CFA) ................................................................................................................................................. 107&nbsp;</p><p>Appendix D: Average Share of Household Income from Various Sources, Including F-Tests to Determine Statistical Significance of the Income Differences Found Between Survey Years ................................................................................................................................................. 108</p><p>Appendix E: Average Share of Household Income from Various Sources, Including T- Tests to Determine Statistical Significance of the Income Differences found between Zones ....... 109&nbsp;</p><p>BIBLIOGRAPHY....................................................................................................................... 110&nbsp;</p>

Project Abstract

<p> According to the UN's Millennium Development Indicators, 57.6% of the rural population in Mali was living below the national poverty line in 2006. To improve on this statistic, it is important to understand the following about communities in rural Mali 1) the makeup of household incomes, 2) factors associated with higher income levels, and 3) the levels of income inequality in these communities. This thesis used panel household data from the Cercle of Tominian and the Cercle of Koutiala to examine these issues. More specifically, a descriptive statistics analysis of reported household incomes was performed, comparing incomes across zones, years, and income quartiles. This showed that households in both zones were poor with only 8-16% of all households earning more than $1/day per capita. It also showed that households in Koutiala earned considerably more income than households in Tominian and that food crops are the most important income source for households in both zones. A Heckman two-step model was also estimated to better understand the determinants of income for cropping, livestock, and nonfarm activities. This analysis showed that having a larger household size and living in Tominian zone were associated with lower probabilities of activity participation and/or lower incomes, while wealth and durable goods indicators, easy road access, and having a household head with at least a primary school education had the opposite effect. Finally, to determine whether certain income activities increase or decrease income inequality levels, regional Gini coefficients were calculated and decomposed. This analysis showed low levels of income inequality with Gini coefficients ranging from 0.37 to 0.42. <br></p>

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