Investigating the Income Inequality in Rural Households of Neyshabur County of Iran with Emphasis on the Role of Non-Farm Incomes

Today, non-farm income is an important part of the livelihood strategies of rural households and plays a great role in reducing the poverty and income inequality. So, this study aimed at investigating the effect of non-farm incomes on income inequality in rural Neyshabur County of Iran. For this purpose, the Gini coefficient decomposition index was used. Required data were obtained from 380 rural households in the county using a multi-stage stratified random sampling method from September 2017 to January 2018. The results of the questionnaires showed that the average income of a rural household in Neyshabur in the period of 2016-2017 was about 211.9 IR million rials. The non-farm incomes (such as self-employment, non-farm wages, pension, rent and profits, and subsidies) accounted for 48.8 percent and farm incomes (permanent and temporary crop and livestock) accounted for 51.1 percent of the total rural households’ income. Gini coefficient decomposition results revealed that while non-farm incomes decreased income inequality, the farm income tended to increase the income inequality among the rural households. The largest share of rural households' income inequality was related to livestock income with 34 percent and the lowest related to the subsidies income source with 2 percent. Based on the results, the policy recommendation of this study is to provide a context for the growth of non-farm activities, especially non-farm wage and self-employment activities in rural areas, to reduce the income inequality.