Understanding dynamics behind farm household income provides insights to foresee future income change among farm households. To better understand the change in farm household income, this study decomposes farm household income by age effects, cohort(generation) effects, and year effects. Constructing pseudo panel by birth year of household heads, this study investigates which factor affects farm household income.
The results show that age effects are pronounced in farm household income, agricultural income, and non-agricultural income. Farm household income moves drawing inverse U shape.
Moreover, cohort effects show that younger generations have earned more income than older generation, which has been resulted from economic growth. It is also noteworthy that transfer from public sector increases by age and younger generations receive more benefits from government than older generations while transfer from family and friends changes in different directions. This implies that the role of government is getting bigger in safety net among farm households and welfare expenditure is likely to explosively increase as farm population rapidly gets old.