Articles
INCOME DISTRIBUTION IN THE PROCESS OF STATE COFFEE PRODUCTION: THE APPLICATION OF THE CURVE OF CONCENTRATION (LORENZ CURVE) AND THE GINI INDEX
The nationalized coffee farms managed and developed by the Coffee Plantation Development Corporation (CPDC) are meant to increase coffee production, employment and income distribution- the pressing issues of the country prior and after the revolution.
The purpose of this paper is to find out whether income distribution is fair and improved within the Corporation.
The Lorenz-curve and Gini index are used to study the income distribution and the change in income inequality.
The ten income class categorizations and widths of the income groups, though arbitrarly chosen, are based primarily on observation of pay to each classification of jobs for 1984 and 1988.
The Gini index for the Head Office, Limmu, Bebeka, Teppi, and overall CPDC was found to be 0.46, 0.19, 0.25, 0.16 and 0.26 respectively, for 1984. However, the corresponding value of Gini index calculated from 1988 data were 0.40, 0.26, 0.32, 0.32 and 0.33. With the exception of the Head Office, the Gini index increased over time, indicating an increase in income inequality.
In the Coffee Plantation Development Corporation, income has improved, inequality has worsened, but not probably worse than the national average.
The income inequality needs to be improved in line with the government policy, but paradoxically, the income generated by the farms doesn’t warrant the increase.