This study examines the patterns of the changing levels of farming household income in the past, with the goal of identifying and analyzing the factors that determine farming household income.
Income from agriculture forms a significant part of income that a typical farming household earns in Korea. The rapid economic growth in and around large cities and industrial centers, however, has caused increasing concentration of wealth in cities, widening the income gap between cities and rural areas. As the population continues to move to cities and industrial towns, the level of income in urban areas continues to rise, while the level of income in rural areas declines with the depletion of population. The level of farming household income also significantly differs by region and crop. In an effort to limit the growing income inequality in rural areas and encourage farmers to continue to produce grains, the Korean government has introduced the Agricultural Produce Price Support Policy, which has significantly ameliorated income inequality between cities and rural areas and also contributed to the increasing agricultural output. The policy, however, has failed to reduce income inequality among farming households due to differences in crops cultivated and commercialized, and may even widen income inequality in rural areas in the long run.
The Ministry of Agriculture and Fishery has published its Report on the Findings of the Survey on Agricultural Economy. This study evaluates the data published in the report to identify and analyze the changing levels of farming household income, determining the decisive factors of farming household income. Additionally, this study explores and identifies limits on simple income comparisons between cities and rural areas.
Agriculture accounted for 76 percent of the total farming household income from 1960 until 1970. By 1971, however, agriculture accounted for 81 percent or more of the total farming household income. This study found that the access to farming facilities and amenities, such as water supply facilities, is a leading factor in the difference of income between rural households. Farming households lacking easy access to such facilities and amenities earned significantly less than households with easy access, due to the additional costs households without had to spend on farming.
In terms of the urban/rural divide, there was not much income difference between cities and rural areas in Korea until the mid-1960s. It was not until the 1970s that the income levels of urban dwellers began to rise significantly above those of rural residents.
The absolute income inequality between cities and rural areas may appear to have diminished significantly in the recent years, but there is still a persistent gap in the amounts of real income that city households and farming households earn. The Korean government needs to counter the growing income inequality among farming households by introducing new measures that can increase the non-agricultural income of low-income farming households. The economic growth in Korea has been accelerated by rapid urbanization since the 1960s, with factories and other industrial facilities increasingly concentrated in urban areas. These production facilities, from now on, need to be distributed more evenly across the nation, with new roads and modes of transportation developed so that residents of rural areas can remain in their communities and commute to and from their industrial work.
농가소득의 결정요인분석(An analysis of the decisive factors of farming household income)
[서울] : 한국개발연구원
|Series Title; No||연구보고서 / 제77-09권|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Macroeconomics|
|Holding||KDI; KDI School|