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Rural nonfarm employment, income, and inequality: evidence from Bhutan

Creator: Rahut, D.B.
Creator: Jena, P.R.
Creator: Ali, A.
Creator: Behera, B.
Creator: Nar Bahadur Chhetri
Year: 2015
Language: English
Publisher: MIT Press Journals
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Type: Article
Place of Publication: Bhutan
Pages: 65-94
Issue: 2
Volume: 32
DOI: 10.1162/ADEV_a_00052
Keywords: Inequality
Keywords: Nonfarm
Description: Using the 2012 Bhutan Living Standard Survey, this paper finds that rural nonfarmactivities comprise 60.7% of rural household income in Bhutan and this contribution increases with higher income and education levels. The poor and less educated participate less in the nonfarm sector.When they do, they are selfemployed in petty nonfarmactivities, which require little investment and little or no skills. Accounting for endogeneity and sample selection issues, we estimate the determinants of participation in nonfarm activities and nonfarm incomes. We find that a household’s education and labor supply play an important role in accessing more remunerative nonfarm employment. Interestingly, we find that women play an important role in self-employment in nonfarm activities. Decomposition shows that nonfarm income has a disequalizing effect and farm income has an equalizing effect, indicating the need to increase the endowment of poor households to enable them to access the lucrative rural nonfarm sector. Further decomposition reveals that self-employment in petty nonfarm activities reduces inequality.
Agrovoc: INCOME
ISSN: 0116-1105
Journal: Asian Development Review

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  • Socioeconomics
    Including topics such as farming systems, markets, impact & targeting, innovations, and GIS

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