Decomposition of the Gini coefficient using Stata
The Gini coefficient is widely used to measure inequality in the distribution of income, consumption, and other welfare proxies. Decomposing this measure can help you understand the determinants of inequality. In this presentation, I will use income data from Mexico to illustrate a user-written command, descogini, that implements the Gini decomposition proposed by Lerman and Yitzhaki (1985, Review of Economics and Statistics 67: 151–156). Using this command, the Gini coefficient for total income can be decomposed in three terms: how important the income source is with respect to total income; how equally or unequally distributed the income source is; and how the income source and the distribution of total income are correlated. In the presentation, I will also illustrate how to obtain the impact that a marginal change in a particular income source will have on total income inequality, as well as how to obtain bootstrap standard errors.
The contribution of charcoal production to rural livelihoods in a semi-arid area in Kenya
Forest incomes in the form of both timber and non-timber forest products are an important source of livelihood for many communities in Africa. A major forest resource is charcoal, which contributes to the livelihoods of millions across the region. While incomes from charcoal are used to meet a wide spectrum of needs within rural livelihoods, the role of charcoal production on livelihoods of small-scale producers is not well understood. Therefore, we provide an example on the importance of charcoal on livelihoods in an agropastoralist community in a semi-arid region in Kenya. Based on a household questionnaire targeting 150 charcoal and 150 non-charcoal makers, as well as focus group discussions, we assessed the determinants for participation in charcoal production and developed a household typology based on charcoal income dependence. We also determined the role of charcoal in income equalization and poverty reduction. Our study shows that charcoal contributes about 20% of the household income in the study area. Gender, land size and the number of food-scarce months are the key determinants of participation in charcoal production. Based on the poverty analysis, we conclude that even though charcoal income does not lift the producers out of poverty, it can mitigate the impacts of poverty by reducing the poverty gap and poverty severity. Based on our findings, we recommend a multipronged approach to address sustainable rural livelihoods including a more explicit acknowledgement of charcoal production as a source of rural income. We also recommend broadening of the local livelihood base and a more active management of the woodland to ensure the sustainability of the income.
Remittances and Inequality
In this paper the authors propose a framework and develop techniques for analyzing the impact of migrant remittances on the distribution of rural income by size and subsequently its impact on rural welfare. Household data are used to assign numerical coefficients to the impact of net remittances from both internal and international migrants on income inequality in 2 Mexican villages. The impact of migrant remittances on the distribution of rural income by size depends critically on the degree to which migration opportunities become diffused through the village population on the returns to human capital embodied in remittances and on the distribution of potentially remittance-enhancing skills and education across village households. Our empirical findings demonstrate that in a village where many households contain internal migrants but few have experience migrating to the U.S. remittances from Mexico-to-US migrants have an unequalizing impact on village incomes while remittances from internal migrants have a favorable effect on the village income distribution. By contrast in a village with a long historyh of sending migrants to the US and hence a more ready access to US labor markets US-to-Mexico remittances have an equalizing impact on incomes. Remittances from internal migrants in this village however embody a large human capital component and are highly correlated with household income. Hence internal migrant remittances account for a comparatively large share of inequalities in the 2nd village. The overall effect of remittances on income inequality is favorable in both villages. Migration type migration stage and interaction terms all appear to play a role in this context. The effects of small changes in remittances upon income inequality and rural welfare in the 2 villages are explored and some implications for migration and rural development policy are considered. (authors modified)