Impact of the economic crisis on income inequality among farm households

Abstract

PurposeThe purpose of this paper is to assess the impacts of the 2008 economic crisis on the change in income inequality among farm households using the micro‐level data. The paper aims to discuss these issues.Design/methodology/approachUsing a national household survey data in Taiwan in 2007 and 2009, the paper applies the Gini decomposition method for income inequality.FindingsResults of a decomposition method indicate that the Gini coefficients decrease for farm households, and that the effects are more pronounced among the full‐time farms. The reduction in the overall income inequality is due to the decreased farm income and off‐farm wage salaries, as well as the increased government payments.Research limitations/implicationsAlthough these findings are interesting and useful, some caveats still remain. First, the analysis can only reveal the short‐term effect of the economic crisis. The long‐term effect could be different. In addition, the paper does not further address whether the impacts may differ for households with different socio‐demographic characteristics of the household members and household characteristics. More detailed information on each household member is required to address this issue. This issue is beyond the scope of the current study and is left for further investigation.Originality/valueNumerous studies have examined the impact of 2008 economic crisis on the general economy, however, little is known about the effect among farmers. This study is among the first to assess the impacts of financial crisis on income inequality between farm and nonfarm households.