ABSTRACT A STUDY OF HOUSEHOLD INCOME DETERMINANTS AND INCOME INEQUALITY IN

According to the UN's Millennium Development Indicators, 57.6 % of the rural population in Mali was living below the national poverty line in 2006. To improve on this statistic, it is important to understand the following about communities in rural Mali: 1) the makeup of household incomes, 2) factors associated with higher income levels, and 3) the levels of income inequality in these communities. This thesis used panel household data from the Cercle of Tominian and the Cercle of Koutiala to examine these issues. More specifically, a descriptive statistics analysis of reported household incomes was performed, comparing incomes across zones, years, and income quartiles. This showed that households in both zones were poor with only 8-16 % of all households earning more than $1/day per capita. It also showed that households in Koutiala earned considerably more income than households in Tominian and that food crops are the most important income source for households in both zones. A Heckman two-step model was also estimated to better understand the determinants of income for cropping, livestock, and nonfarm activities. This analysis showed that having a larger household size and living in Tominian zone were associated with lower probabilities of activity participation and/or lower incomes, while wealth and durable goods indicators, easy road access, and having a household head with at least a primary school education had the opposite effect. Finally, to determine whether certain income activities increase or decrease income inequality levels, regional Gini coefficients were calculated and decomposed. This analysis showed low levels of income inequality with Gini coefficients ranging from 0.37 to 0.42. ii