Incomes of the farm population and small-scale entrepreneurs

Because agriculture is entrepreneurial activity it is natural also to compare the in-comes of farmers to those of other entrepreneurs. The group most clearly comparable with farmers is small-scale entrepreneurs. However, in practice preparing an income comparison concerning entrepreneurs is problematic. Statistics on the income data of small-scale entrepreneurs are compiled only on the basis of taxation data. Thus, in order to arrive at an objective income comparison, the differences between the com-parison groups caused by different tax stipulations, among other things, should be taken into account. Within the framework of the stipulations of the Act on Taxation of Income from Industries (ANON. 1968) it is possible to regulate the result of enter-prises much more effectively and in different ways than can be done in the taxation of agriculture and forestry (ANON. 1968, 1986c, HIETALA & LEHTONEN 1979, KET-TUNEN, P. et al. 1980, PUURUNEN 1987, YLISIPPOLA 1989).

In the following the income data on farmers and small-scale entrepreneurs has been examined only on the basis of the Income Distribution Statistics. Already in compiling these statistics, an attempt has been made to make the income data concern-ing different population groups comparable with each other, but for the part of, for example, entrepreneurial income from a business or trade the statistics are based directly on data on personal taxation. Because the Income Distribution Statistics con-cern mainly households of natural persons, even small enterprises of a corporate form cannot be included, except through the wage and dividend incomes of the families in question. Income data concerning small-scale enterprises with 1-4 employees, includ-ing the owner, are directly available in the Income Distribution Statistics. A more detailed account of the income disparities between farmers and small-scale entrepre-neurs has been presented in a study by YLISIPPOLA (1989), which is mainly based on the Income Distribution Statistics from 1986.

In 1986 the interview of the Income Distribution Statistics included about 1,160 sample households of small-scale entrepreneurs, in which the main occupation of the head of the household is an entrepreneur (ANON.1989g, p. 14). It was also possible to

take the line of business into account to some extent as a classification criterion. In 1986 the basic population of small-scale entrepreneurs consisted of 82,600 house-holds. In 1986 the numbers of households in the most central Iines of business were as follows:

Industry and construction 24,500 households Trade and accommodation 17,200

Transportation 18,400

Other services 22,500

Small-scale entrepreneurs, total 82,600 ^if

In 1986 the average entrepreneurial income of the households of small-scale entre-preneurs was FIM 66,900/household. In the 1980s the incomes of entreentre-preneurs en-gaged in industry and construction as well as trade and accommodation remained below the average, whereas the entrepreneurial incomes of those engaged in transpor-tation and other services were above the average in most years. In 1986 the average agricultural, forestry and entrepreneurial incomes of farmer households were higher than the corresponding incomes in the households of small-scale entrepreneurs. In-stead, wage income in the households of small-scale entrepreneurs was, on the aver-age, twice that in farmer households (Table 11). It seems that it is more usual to pay wages or salaries to family members for their work in the enterprise in entrepreneurial households than in farmer households.

The average primary income of farmers, including entrepreneurial income and wage income, was FIM 111,200/household, and that of entrepreneurs FIM 126,900/

household. Consequently, in 1986 the primary income of farmer households was, on the average, 88 % of the primary income of the households of small-scale entrepre-neurs. In farmer households the number of economically active persons was 2.2/

household, and in entrepreneurial households the corresponding figure was, on the

Table 11. Incomes of farmer and entrepreneurial households according to the Income Distribution Statistics in 1986.

Farmers Small-scale entrepreneurs FIM/household FIM/household

Entrepren. income 84 100 68.6 66 900 49.5

Wage income 27 100 22.1 60 000 44.4

Property income 11 400 9.3 8 900 6.1

Factor income 122 500 100.0 134 800 100.0

Av ailable income 119 700 105 100

Table 12. Primary income of farmer households per economically active person and available income per consumer unit in relation to the corresponding incomes in the households of small-scale entrepreneurs in 1983-1986. Ratios, income of the households of small-scale entrepreneurs in each year in different Iines of business = 100.

Primary income Av ailable income 1983 1984 1986 1983 1984 1986 Industry and construction 81 78 74 115 102 104

Trade and accommodation 81 80 72 108 97 97

Transportation 59 65 59 88 87 97

Other services 56 62 64 85 80 91

Small-scale

entre-preneurs, average 67 69 68 99 90 96

average, 1.7 persons. In 1986 the primary income per economically active person in farmer households was the average of 68 % of the corresponding comparison income of small-scale entrepreneurs (Table 12).

Even if the average primary income of farmer households was smaller than that of entrepreneurial households, almost the same income level was reached for the part of the available income. In the last statistical years of the Income Distribution Statistics, the received income transfers in farmer households amounted to 15-20 % and in entre-preneurial households to 10 % of the total income. The share of various kinds of pensions in the received income transfers was larger in farmer households than in entrepreneurial households. Paid income transfers, both social security expenditure and taxes, were about a third smaller in farmer households. With regard to the differ-ent Iines of business, in the last years the available income of farmer households was about the same as that of entrepreneurs engaged in trade and accommodation, and slightly higher than of those engaged in industry and construction. However, farmer households have not quite reached the income level of entrepreneurs engaged in trans-portation and other services.

7. Income comparisons concerning the farm population and