Population aging in agricultural households becomes more prevalent than in non-agricultural households as better-educated, wealthier, and younger-generation workers tend to shun low-paying manual jobs in agriculture
[2,3][1][2]. Underemployment, which was considered an urban-specific issue in the past, is also a serious problem among agricultural households because of surplus labor, particularly in developing countries
[4][3]. Underemployment is the condition where workers’ working hours are less than full-time or positions are inadequate concerning workers’ training or economic needs
[5][4]. Therefore, the term underemployed workers refers to relatively less productive workers. Even in many developed countries, new technology adoption and structural change result in a greater extent of underemployment in the agricultural labor market (e.g., due to the adoption of newly developed farm equipment, farmers need fewer workers to operate their farms; yet all family workers are still classified as employed farm workers)
[6][5]. The underemployed agricultural household members (who are likely less productive family workers) decrease overall household productivity and per capita household income.
Many studies in labor economics point out that aging and underemployment are major factors in determining the wage, well-being, and productivity level of workers (e.g.,
[5,7,8,9][4][6][7][8]). A few studies specifically argue that aging and underemployment become more prevalent and problematic in the agricultural sector than non-agricultural sectors, which could be two major factors affecting the income disparity between agricultural and non-agricultural households. For example, Lee et al.
[10][9] show that the Korea Gini index increased from 0.330 to 0.342 between 2006 and 2011 and that population aging has a significant effect on the inequality index. Bell and Blanchflower
[7,11][6][10] find that for the post-Great Depression period in the U.K. and U.S., underemployment had a more significant role in wages than unemployment for all industries. In addition, Loughrey and Hennessy
[12][11] show that the underemployment rate increased by 10% from 2002 to 2010 in the Irish agricultural sector and that the change in the underemployment rate was significantly correlated with a change in agricultural household income. Previous studies provide ample evidence that aging and underemployment play a significant role in the economic condition of agricultural and non-agricultural households (e.g.,
[4,5,8,9,11,12,13][3][4][7][8][10][11][12]). However, little has been done in the literature to empirically examine the effects of aging and underemployment on household income and income disparity between agricultural and non-agricultural sectors.