Non-farm income, gender, and inequality: evidence from rural Ghana and Uganda

This paper examines how the distribution of earnings in rural Ghana and Uga nda differs by income type and by gender. We find that non-farm earnings co ntribute to rising inequality, but that lower income groups also benefit du e to strong overall growth in non-farm earnings. The inequality-inducing ef fect is driven by self-employment income; wage income, on the other hand, r educes inequality. The tendency of non-farm income to contribute to inequal ity is greater among female-headed households for whom self-employment is i mportant and nonfarm opportunities more constrained. Determinants of non-fa rm income are estimated and appear to be strongly related to location, educ ation, age, and distance to market. Estimates of the linkages to agricultur e in Ghana are weaker than expected, showing the non-farm sector to be func tioning more as an alternative activity to agriculture than as a complement . (C) 2001 Elsevier Science Ltd. All rights reserved.