The effect of various income sources on income inequality

Abstract

This study explores the dynamics of income and income inequality in Vietnam from 2004 to 2014. Two main population subgroups are investigated: the ethnic majority, known as the Kinh people, and the minority group, which includes 53 minor ethnicities in Vietnam. The findings show that the income gap among ethnic groups has increased over the last decade. The Gini index decomposition indicates that wages and nonfarm business income are the two main determinants of income inequality. Cultivation and agricultural side-line incomes were relatively evenly distributed, despite their recent smaller equalizing effect. Both sub-population groups have experienced a declining contribution from the agricultural sector to overall household income. Changes in income inequality in Vietnam by income source reflect the change in the structure of the economy from reliance on agriculture to non-agricultural economic activities. Show more