Abstract
Rural – urban income gap is an important social-economic development indicator for a society. A large rural - urban income gap within a society reveals a split of it into two distinct societies, one extremely poor compared to the other. In Romania, almost half of the resident population lives in rural areas (46.02% in 2019), while the urban-rural migration flow is higher than the traditional reverse flow since 1997. However, the country is characterized by regional economic disparities, Bucharest-Ilfov region being the most economically developed. Labour market in rural areas is underdeveloped, rural population being highly depended on subsistence agriculture. Furthermore, rural areas have a low level of income and living standards. In this paper, we analysis the rural-urban labour market dynamics and rural-urban income gap using a LMDI (logarithmic mean Divisia index) decomposition for 2005-2019 period. Factors such as income gap effect and structural rural income effect are considered. Results show that the total urban–rural income gap has decreased with 8.91%, while structural rural income effect contributed with an increase of only 0.63%, the income gap effect (of different employed population groups) being of -9.49%.
Highlights
Rural development is as important to a country as urban development
Results show that the total urban–rural income gap has decreased with 8.91%, while structural rural income effect contributed with an increase of only 0.63%, the income gap effect being of -9.49%
The dynamics of urban-rural labour market in Romania is characterized by a lack of employment opportunities in rural areas
Summary
Rural development is as important to a country as urban development. increasingly economic and social development gaps between rural and urban areas were observed in many countries in the last years posing serious challenges in societies. We analysis the ruralurban labour market dynamics and rural-urban income gap using a LMDI (logarithmic mean Divisia index) decomposition for 2005-2019 period. Results show that the total urban–rural income gap has decreased with 8.91%, while structural rural income effect contributed with an increase of only 0.63%, the income gap effect (of different employed population groups) being of -9.49%.
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