Farmer Income Differential in Regions

Key words: 
• income differential /
• Concentration Index /
• structure effect /
• farmer /
• Gini Index

Abstract: China's success in reform and opening up policy for twenty years is regarded as China's miracles in the world, whereas the income differential widening phenomenon has been the focus of the policymakers and researchers. This article researches 1994–2003 China's rural regions income differential and its decomposition. The method this paper used to measure the disparity is Gini Index. There are many ways to compute it, so the easiest way to decompose Gini Index—Matrix method is adopted. And based on it, farmer's income could be divided into wage income, farming income, transfer income and property income according to its composition. The conclusion is that all of the indexes are between 0.2 and 0.3, at the comparatively average level. From the fluctuation trend, it increased from 1994 to 1995, while reduced from 1995 to 1996, fluctuated in 1997, and then diminished again. In general, farmer's regions income differential stays at comparatively average level, but it has the widening trend with time. Through decomposing Gini Index, wage income is the most important increasing factor, while farming income is the reducing factor.