Determinants of Farm Family Income Inequality

Income inequality is classified as “long run” when due to the distribution of resource ownership and “short run” when due to transitory disturbances or variations in returns to comparable resources. Owing to deficiencies of census size distributions of income, data pertaining to the distribution of human and non‐human resources are used to estimate long‐run inequality for each state. A cross‐sectional regression analysis of state differences in inequality and changes from 1949 to 1959 yields the following results: (1) labor market adjustments have been influential in reducing short‐run but not necessarily long‐run inequality; and (2) increases in the capital‐labor ratio, the average level of schooling, and research and extension are all associated with increasing dispersion of farm incomes, though also with increasing average incomes of farmers.