THE CONTRIBUTION OF VARIOUS NON-FARM INCOME SOURCES IN REDUCING INCOME INEQUALITY ACROSS DIFFERENT FARM SIZES: A COMPARISON OF BARANI PUNJAB AND COTTON/WHEAT SINDH

Non farm sector is playing a vital role in reducing income inequality among rural households. The aim of the present paper is to decompose the non-farm income of rural households and to analyze the contribution of each source towards non-farm income inequality across different farm sizes in two agro-climatic zones, i.e. Barani Punjab and Cotton/Wheat Sindh. Household income and expenditure survey of Pakistan for the year 2005-06 has been used. The Coefficient of Variation and Gini Coefficient are used for inequality decomposition. The results show that for all farm size categories self employment is the major contributor in household’s non-farm income and its inequality in both zones. Its share in non-farm income is higher in Barani Punjab while its contribution to non-farm income inequality is higher in Cotton/Wheat Sindh. In Barani Punjab the household having land between 12.5 to 25 acres are earning highest share from self employment while in Cotton/Wheat Sindh the big land lords earns more from it. Besides, it is biggest contributor in non-farm income inequality in both zones.