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Income Inequality Trends in sub-Saharan Africa

Divergence, Determinants, and Consequences

image of Income Inequality Trends in sub-Saharan Africa

Sub-Saharan Africa (SSA) recorded a remarkable economic performance in the first 15 years of the 21st century. Such an encouraging trend, which reversed the stagnation or decline of the prior 25 years, was accompanied by a perceptible, modest, but uneven decline in aggregate poverty, together with substantial cross-country variation in the poverty-reducing power of growth. This is reflected in, and partially driven by, the variation of inequality levels and trends among the African countries. Proper documentation of inequality levels and trends in the region therefore becomes essential in order to better understand the slow and varying rate of decline of poverty reduction in the region. To this end, this book, an outcome of a comprehensive study of income inequality in SSA, documents the initial conditions and changes in income inequality that have taken place in the region since the early 1990s. It proposes hypotheses to account for this experience and draws relevant lessons that could help accelerate reduction in income disparities.

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An econometric investigation of the causes of the bifurcation of within-country inequality trends over 1991-2011 in sub-saharan Africa

The inequality issue has recently received growing attention in SSA from research, policy and political perspectives. In fact, while inequality is a key determinant of poverty and most other SDGs, its documentation, the analysis of its determinants and the debate on how to reduce it have been limited to date. The main reasons for this are the exclusive emphasis placed on growth by past development strategies, limited data availability and the heterogeneity of inequality levels, trends and determinants in the region. In particular, the picture that emerges from the review conducted in Chapter 2 for 1991-2011 points to a divergence of national inequality trends. The theoretical explanation of this divergence and the related empirical evidence have been discussed in Chapter 15, while other chapters analyse specific aspects of this problem. This chapter, in turn, focuses on econometrically testing the working hypotheses about the inequality determinants formulated in Chapter 2, explored on microdata in Chapters 12 and 13 and examined in macro and panel models in several other chapters of this book. The econometric test is conducted on the 29 countries included in the IID-SSA dataset, which covers 81.8 per cent of the African population and a greater share of its GDP. Thus, its conclusions can be considered to apply broadly to the region as a whole.

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