Income Inequality by Income Sources in Eastern Senatorial District of Kogi State

Abstract

The major public policy challenge in the developing world like Nigeria is the problem of income inequality. This is because in most developing economies of the world like Nigeria, incomes are unequally distributed among individuals and groups because of differences in political power, intellectual power, and economic power which are the prerequisite for income option. This study therefore examines the levels of income inequality and poverty among households in Eastern Senatorial District of Kogi State. Data for the study were collected with structured questionnaires administered to 675 randomly selected households in the area. This research work effectively used two research hypotheses to guide the study. The analytical tools employed were descriptive statistics, Gini-coefficient and coefficient of variation methods. Descriptive statistics were used to describe the spread of the responses of the respondents on sources of income from primary and secondary sources. While Gini coefficient decomposition results show the variation in the level of income inequality as explained by various Gini coefficients of income sources. Breakdown of the analysis shows that farm income was 0.433, wages and salaries 0.772, craft and Artisan 0.543, entrepreneurial 0.865, trade 0.752, other incomes 0.665 and credit 0.875 meaning that there is variation in level of income inequality in the area. From the analysis of coefficient of variation, it was discovered that while farm income contributed 50.1% to total inequality, off- farm income as a whole contributed 49.9% of total inequality. From the result of the analysis, the two hypotheses stated were tested and rejected. Based on these, recommendations such as improvement and marketing of agricultural product for optimal growth and efficiency and provision of sustainable non- farm employment in the area and others were proffered.