Effects of agricultural extension packages on income inequality: Case from Northern Ethiopia

The study explores the impact of agricultural extension on households’ income and income inequality at a micro level using data from 734 rural households (out of which 390 are extension participants and 344 are non-participants) in Tigray region, northern Ethiopia. It also deals with the determinants of income and income inequality. The data for the study is derived from eight tabias and three agro-ecological zones of the Geba catchment collected by MU-IUC project. Descriptive statistics with respective t-values, Gini Decomposition Analysis and OLS Model together with Regression based Inequality Decomposition Analyses are employed to the respective objectives of the study. In the decomposition analysis, off-farm income and livestock income show an inequality decreasing sources while agricultural (mainly crop) income reveals an inequality increasing source. However, some off-farm income sources such as wage income which includes food for work program run by the government working in rural projects has an inequality reducing effect. Generally, the Agricultural extension program has substantial positive impact on households’ income.