Effects of Income Sources on Inequality among Agricultural Households in Northeast India

Abstract

The present study tries to assess the effect of income sources on the inequality among rural households of the North-east Indian states using large household-level data. The results indicate that as income level increases, farm households tend to shift from less remunerative economic activities, i.e., crop production towards higher value ones, i.e., non-farm business activities. Agriculture contributes highest to the income inequality in the region but has an inequality decreasing effect. The distribution of wages and salaries, livestock income and non-farm business income has an un-equalising effect on income distribution. Theil index estimates showed that intra-state, intra-district and intra-landholding size inequality is the main contributor to total inequality in the region.