Income distribution of the farm population in the 1980s

In the following, the income distribution of the farm population and the changes in it are examined on the basis of distribution tables published in the Income Distribution Statistics as well as in the Enterprise and Income Statistics of Agriculture and For-estry. In the Income Distribution Statistics income earners are classified into deciles on the basis of the different income concepts. The group of agricultural entrepreneurs includes, in addition to farmers, e.g. commercial gardeners, fur producers and entre-preneurs of forestry and fishery (ANON. 1989g, p. 14). In the study according to primary income earners, decile classification is formed on the basis of the distribution of primary incomes of economically active persons. The decile classification indicat-ing the distribution of available incomes is based on the incomes calculated per household as well as per member of household. The study according to primary income earners mainly indicates the wage incomes and entrepreneurial incomes in

different socio-economic classes, and that based on disposable incomes the livelihood of households and their members.

In 1986 agricultural entrepreneurs included in the five highest deciles received 76

% of the primary incomes per income earner, 67 % of the available incomes of households, and 57 % of the available income per person. Correspondingly, for the part of primary incomes the mean income was about 18 % and for the part of available incomes about 6 % higher than the median income. Proportionally, the mean income deviates most from the median income on small farms. In terms of the mean income and the median, the income distribution of other entrepreneurs is skew in the same way as in the case of agricultural entrepreneurs. Instead, the mean income of wage earners is about the same as the median income, which means that, in relation to the incomes of wage earners, the mean incomes of agricultural entrepreneurs are higher than the median incomes (see also NEVALA & OJANIEMI 1988, p. 112). The Gini coefficient indicating the average equality of the income distribution of ali decile groups is 0.37 for primary incomes, 0.24 for available incomes per household, and 0.105 for available incomes per person. Consequently, there are considerable differen-ces in the primary incomes of agricultural entrepreneurs, but when received and paid income transfers as well as the size of the households are taken into account the income disparities decrease. This can also be seen from the location of the correspond-ing Lorenz curves in relation to the diagonal indicatcorrespond-ing a completely even income distribution in Figure 11.

The decile classification concerning the income distribution of the comparison groups of this study is presented in the Income Distribution Statistics for the industrial and construction workers, which correspond the most closely to the comparison groups, and for the so-called other entrepreneurs. In 1986 the Gini coefficients indicating the

Income % 100

90 — 80 — 70 — 60 — 50 — 40 — 30 — 20 — 10-

Primary income per economically active person Available income per household

Available income per member of household

/

0

1 2 3 4 5 6 7 8 9 10 Income earners by decile groups

Figure 11. Lorenz curves indicating the equality of the income distribution of agricultural entrepreneurs for the part of primary and available incomes in 1986.

workers' income distribution were 0.21 for primary incomes and 0.19 for the available incomes per household. The available incomes per person are almost even, and the value of the Gini coefficient indicating them is under one. The corresponding Gini coefficients conceming the income distribution of entrepreneurs are about 0.43 for primary incomes, and 0.27 and 0.14 for available incomes. The decile classification in the Income Distribution Statistics includes, in addition to the enterprises with less than five persons this study is concemed with, larger enterprises as well. On the basis of YLISIPPOLA's (1989, p. 94) results, the income distribution of small-scale entrepre-neurs is more unequal than that of farmers, but not as unequal as the income distribu-tion of ali entrepreneurs.

It has also been possible to examine certain aspects of the income distribution of the farm population on the basis of the income and taxation data on agriculture and forestry (ANON. 1988g), published in connection with the Enterprise and Income Statistics of Agriculture and Forestry. In the Enterprise and Income Statistics, the data on the personal taxation of ali natural persons who have agricultural or forestry in-come have been tabulated, ordered according to the total inin-come liable to state taxa-tion. 13 income eamer groups are included in the table and, because the classification is based on nominal incomes, due to the rise in the income level as well as inflation, income eamers shift from the lower income classes to the higher ones, and the classifi-cation loses some of its information value. In this study, however, income distribution has been examined over a quite short period of time, i.e. the years 1980-1986. In 1986 altogether 258,700 persons had incomes from agriculture, which is about 14 % less than in 1980.

The indicators of the distribution of the total incomes liable to state taxes as well as net incomes (= total income minus taxes) suggest that the income distribution has balanced in the 1980s. The distribution of agricultural and forestry incomes has re-mained almost the same, which means that the balancing has mainly occurred for the part of the off-farm incomes. In 1983 and 1984, which were better than average years for agriculture, the mean of the agricultural and forestry incomes was higher in rela-tion to the median than in other years, but this had no effect on the distriburela-tion of the total incomes. In 1980 the 50 % of income eamers with the highest incomes received 80 % of the total income and 77 % of the net income, in 1986 the corresponding shares were 75 % and 72 %. In the whole research period the 50 % with the highest incomes received about 75 % of the incomes from agriculture and forestry. The decrease in the Gini coefficient (Table 6) as well as the corresponding shift of the Lorenz curve closer to the diagonal indicating an even distribution (Figure 12) also in-dicate the relative balancing of the income distribution for that part of the total and net incomes.

Among the decile examinations according to the Income Distribution Statistics, which have been presented earlier, examinations per primary income eamer are the most closely comparable to the study of the total incomes based on the Enterprise and Income Statistics of Agriculture and Forestry. Despite the different bases for the statistics, in 1986 the aforementioned indicators of the income distribution were the same according to both statistical sources. Instead, in 1980 the figures according to the Enterprise and Income Statistics were a few percentage points higher, and thus they point to a slightly more notable balancing of incomes. Within the framework of the

Table 6. Indicators of the income distribution of agricultural income earners in 1980- 1986.

1980 1981 1982 1983 1984 1985 1986 Mean bigger than median, %

Income from agriculture

and forestry 4.4 4.1 4.7 12.7 12.8 8.2 8.3

Total income 32.9 31.0 28.9 23.7 23.8 18.1 18.4

Net incom 15.6 16.5 14.4 9.8 9.7 6.4 7.2

Share of the 50 % with the highest incomes, % Income from agriculture

and forestry 75.1 75.4 75.4 74.8 75.6 75.1 74.6 Net income 77.4 77.7 77.2 72.6 71.7 71.6 71.6 Gini coefficient (x100)

Income from agriculture

and forestry 35 35 35 35 36 34 34

Total income 44 44 44 42 39 38 37

Net income 38 39 38 32 32 31 31

Income % 100

90 - 80 - 70- 60- 50- 40- 30- 20- 10-

Year 1980 Year 1986

/..

7 ...

...*

0 I I 1 1 1 1 I

0 10 20 30 40 50 60 70 80 90 100 Income earners % Figure 12. Change in the income distribution of agricultural income earners in

1980-1986. The Lorenz curves indicating the net incomes (= total income minus taxes).

data used in this study, it has not been possible to examine the income distribution of the farm population or of the comparison groups. However, it has been noted earlier that, when e.g. the farm size and the production line are taken into account, the income disparities between the different farmer groups decrease, and the income distribution is more equal than within the farm population on the average. For the part of the other population groups, the income distribution of wage earners has proven relatively equal on the basis of the Income Distribution Statistics. It has been possible to take the inequality of the income distribution of small-scale entrepreneurs into account in the study by examing, in addition to the average results, the results of the different line of business.

6. Incomes of the farm population in relation to incomes of