Effects of Farm and Non-Farm Income on Income-Inequality among Rural Households in Osun –State, Nigeria

Rural households in sub-Sahara African drive their income from a variety of sources with farm and non-farm activities accounting for a substantial share of total income. Despite the importance of non-farm activities for rural farm households, little is still known about the impact of such activities on the distribution of income and poverty in Nigeria. This study access the effect of farm and non-farm income on Income- inequality among rural household. The study was carried out in osun state, Nigeria. The study was based on primary data obtained through the use of three hundred and fifty-four structure questionnaire using a multi-stage (three stage) sampling procedure. Both descriptive statistics, gini inequality decomposition by type of income and tobit model analysis were used to analyzed the data obtain.The result obtained from the study shows that majority (64.12%) of all households’ derived income from farming which also accounted for 62.6% of the total income. The remaining 37.4% of total Income are derived from different sources from non-farm income. These are non-farm wage and self-employment, each respectively constituting 18.5% and 18.9%.Result of determinants of household income revealed that the major determinants of self-employment income were the age of the household head, their sex, years of farming experience and their household size. For non-farm wage employment income, their major determinant were the sex of the household need, household educational level, farming experience, access to credit and land ownership. For determinants of farm income, only farming experience and land ownership were the significant determinants of the income.Result of gini decomposition by type of income method reveal that farm income as a whole account for 85.31% while non-farm account for only 14.6% of total inequality. The relative concentration coefficient of 1.51 also confirm that farm income is inequality increasing where as non-farm income with value of 0.42 in inequality decreasing in the study area.Conclusively, non-farm income will help in absolving farm income stock and improve income distribution among household in rural areas. Keywords: effect, farm income, non-farm income, income inequality, rural household