Why do some people receive higher incomes than others with similar talents and abilities? And why do certain sources of income, such as income from farm labor and income from growing sugarcane, go to different people? What steps can be taken to reduce the wide differences in income earned, so that the number of people living below the poverty line can be reduced? What roles do education and the migration of household members play in lifting people out of poverty and in improving income distribution?
To answer these questions, researchers in recent years have used various techniques to analyze the sources of income inequality and poverty in developing countries. These studies help policymakers understand the root causes of income inequality and poverty within their societies. Equipped with such information, policymakers can take specific measures to improve income distribution and the income-earning potentials of different groups of people.