Nonfarm Income, Inequality, and Land in Rural Egypt

Abstract

This article proposes to clarify the impact of nonfarm income and unequal land distribution on rural income inequality by analyzing the results of a new nationally representative household survey in Egypt. The article seeks to make three contributions. First it uses standard decomposition techniques based on the Gini coefficient to pinpoint the contribution of five different sources of rural income--including nonfarm income--to overall rural inequality. This is useful because of few past studies have used disaggregated household-level income data to analyze the contribution of nonfarm income to overall rural inequality. Second the analysis applies a new income decomposition procedure based on regression analysis. This procedure proposed by J. Morduch and T. Sicular provides a flexible and efficient way for quantifying the role of various household-level variables in determining the level of income inequality. Third the study uses the new income decomposition procedure to identify the contribution of one specific variable--land ownership--to various sources of income inequality. This analysis finds that land ownership which is distributed very unevenly in rural Egypt is negatively and significantly related to the determination of nonfarm income; however land ownership is positively and significantly related to the determination of agricultural income. (excerpt)