Title_ Micro-determinants of Income Inequality and Consumption in Rural Bangladesh

Author_ Sanzidur RAHMAN

Pages 107-134

Abstract_ The paper examines the extent to which household andregional characteristics influence income inequality andconsumption/welfare based on an in-depth survey of 406households from 21 villages in three regions of Bangladesh.Results show that the overall Gini coefficient for rural incomes is0.43 but Gini-decomposition revealed that the contribution ofmixed crop production to inequality is just 10 percent while “GreenRevolution” technology contributes almost 29 percent. Landownership, farm capital assets, modern irrigation, non-agriculturalincome, and household head’s education significantly increaseconsumption. Tenants and households with more dependents aredoubly disadvantaged and consume significantly less. Regionalfactors also significantly influence inequality and consumption.Consumption is significantly higher in regions with developedinfrastructure. Comilla is the region with the highest level ofinequality and a significantly lower level of consumption. Thus anintegrated policy of investments in modern irrigation, cropdiversification, tenancy reform, mass education and ruralinfrastructure is necessary to increase consumption/welfare andreduce income inequality in Bangladesh.

Keywords_ Income inequality, Gini-decomposition analysis, Consumption or welfare determinants, Bangladesh