This paper analyses the association between household characteristics – in particular
size and location, and for the household head age, sector of employment (and the
tariff applicable to that sector) and education - and household income using data
from the Tanzania Household Budget Survey for the years 1991/92, 2000/01 and
2007. The static analysis of the determinants of household income is based on the full
sample and is complemented by a dynamic analysis using a pseudo-panel
(representative households). Larger households have lower income; living in urban
areas is associated with income around one quarter higher than rural households;
and location in the Coastal zone, which includes Dar es Salaam, increases household
income by about 15% compared to the poorest region (Central). Years of education
of the household head is associated with higher income: each additional year of
education adds about 4.5%. Average incomes of agriculture households are lower
than for manufacturing households, but within each broad sector incomes appear to
be higher in sub-sectors with higher tariffs. Household income tends to increase in
both tariffs and education, but the effect of tariffs diminishes or becomes negative for
household heads with secondary education and alters over time. Observing that
tariffs offer less protection to the incomes of more educated workers compared to
less educated (less skilled) workers is consistent with better educated workers being
more productive and therefore in firms, or sectors, better able to compete with
imports. Given data limitations it would be incorrect to infer a causal effect of tariffs
on household incomes. Nevertheless, the analysis is informative about the effect of
the cross-sector pattern of tariff protection on household incomes allowing for other
determinants.