Impact of Aging and Underemployment on Income Disparity between Agricultural and Non-Agricultural Households

Chanjin Chung,Joohun Han

doi:10.3390/su132111737

Abstract

This paper examines how aging and underemployment affect household income and household income disparity between agricultural and non-agricultural sectors. Our study uses household panel data from South Korea for the period 2009–2016, which include, on average, 6721 representative households each year. A three-step regression analysis was conducted to estimate the aging and underemployment effects on household income and the income disparity between agricultural and non-agricultural households. First, we estimate aging and underemployment effects on household income from all households using a year fixed-effect longitudinal model. Second, our study investigates whether the marginal effect of aging and underemployment on household income differs between agricultural and non-agricultural sectors. Finally, we simulate the estimated model to illustrate how government policies could help reduce the income disparity. Our results show that aging and underemployment affect household income negatively overall. The negative marginal effect of the two factors was greater in the agricultural sector than in the non-agricultural sector. Results from policy simulations suggest that the implementation of proper government policies to address aging and underemployment problems in agricultural households could significantly reduce the income disparity between agricultural and non-agricultural sectors.

Highlights

The income disparity between agricultural and non-agricultural households has been increasing in many countries
Our study investigates the role of aging and underemployment on household income and income disparity between agricultural and non-agricultural sectors
We measure aging as the ratio of the number of 65 years or older people in the household to the total number of household members [28]

Summary

Introduction

The income disparity between agricultural and non-agricultural households has been increasing in many countries. Studies in the labor economics literature often link population aging and underemployment to low labor participation and productivity, fewer savings, and greater financial pressure on households [1]. Even in many developed countries, new technology adoption and structural change result in a greater extent of underemployment in the agricultural labor market (e.g., due to the adoption of newly developed farm equipment, farmers need fewer workers to operate their farms; yet all family workers are still classified as employed farm workers) [6]. The underemployed agricultural household members (who are likely less productive family workers) decrease overall household productivity and per capita household income

Methods

Results

Conclusion