Assessing Determinants of Income of Rural Households in Bangladesh: A Regression Analysis.

Type Journal Article - Journal of Applied Economics & Business Research
Title Assessing Determinants of Income of Rural Households in Bangladesh: A Regression Analysis.
Author(s)
Volume 4
Issue 2
Publication (Day/Month/Year) 2014
Page numbers 80-106
URL http://www.researchgate.net/profile/Dayal_Talukder/publication/264672674_Assessing_Determinants_of_I​ncome_of_Rural_Households_in_Bangladesh_A_Regression_Analysis/links/5439050a0cf204cab1d735c8.pdf
Abstract
The purpose of this study is to investigate the determinants of income and growth in income of rural households in Bangladesh in the post-liberalisation era. Using data mainly from secondary sources, the study applied the ordinary least square (OLS) regression models to assess the determinants. The determinants were justified based on both initial (1985-86) and current (2005) endowments (household characteristics) for a comparative analysis. The study used both economic and non-economic characteristics simultaneously for considering their joint effects on household income. The OLS regression models revealed that household size was the only noneconomic factor that was statistically significant and positive determinant of household income in both 1985-86 and 2005. Household size was the largest positive determinant and small farmer dummy was the largest negative determinant of income in 1985-86. Similarly, household size was the largest positive determinant and farm-household dummy variable was the largest negative determinant of income in 2005. Although rice is the staple food in Bangladesh, the shares of income from rice had negative regression coefficients in both 1985-86 and 2005, suggesting that share of rice income was not a determinant of income. Considering initial endowments, household land area was the largest positive determinant and share of income from wage-salary was the largest negative determinant of income-growth in 1985-86. Similarly, considering current endowments, change in share of income from house rent was the largest positive contributor and share of income from rice was the largest negative contributor to growth in 2005. The share of income from rice was positive determinant considering the current year endowments and was not statistically significant with the base year endowments. While the share of agriculture income was a positive determinant of household income in both years, the magnitude of it influence was very insignificant in 2005. This study suggests that an increase productivity of rice did not influence in determining income and growth in income of rural households in the post-liberalisation era, implying the requirement for the government policy interventions to support farm households for maintaining food security and price stability in the economy.

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