The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces

Enowbi Batuo, M., Malki, I. and Kararach, G. 2022. The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces. World Development. 157 105939. https://doi.org/10.1016/j.worlddev.2022.105939

TitleThe dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces
TypeJournal article
AuthorsEnowbi Batuo, M., Malki, I. and Kararach, G.
Abstract

Reducing income inequality is a crucial goal of sustainable development as income inequality often viewed as harmful to economic growth. The main aim of this paper was to empirically assess the macroeconomic and institutional drivers of income inequality in Africa. We use a Kuznets curve framework, which emphasises the role of income per capita in explaining the time path of inequality. In contrast to much of the literature, we explicitly examine the possibility of the existence of multiple income steady states. Using the concept of clubs of convergence, we show that per capita income is divergent and identify four steady states to which groups of economies converge (i.e., high-income to low-income economies). Using panel data models and a data set encompassing 52 African countries spanning the years 1980–2017, we show that once these multiple steady states are accounted for, the Kuznets curve relationship becomes unstable. Our findings suggest that inequality may be increasing in high-income countries in Africa, while decreasing in low-income or the least developed economies. In addition, the role of macroeconomic and institutional factors in explaining income inequality is limited and differ across convergence clubs. Evidence suggests the importance of fiscal, employment and monetary policies and the rule of law to tackle inequality in high-income economies, while they have no statistically significant role in low-income economies’ income inequality.

KeywordsIncome convergence and distribution
Income inequality
Macroeconomics and institutional effects
Africa
Article number105939
JournalWorld Development
Journal citation157
Year2022
PublisherElsevier
Publisher's version
License
CC BY 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1016/j.worlddev.2022.105939
Web address (URL)https://www.sciencedirect.com/science/article/pii/S0305750X22001292
Publication dates
Published online06 Jul 2022
Published in printSep 2022

Related outputs

Connectedness Between Central Bank Digital Currency Index, Financial Stability and Digital Assets
Sivaprasad, S., Bas, T. and Malki, I. 2024. Connectedness Between Central Bank Digital Currency Index, Financial Stability and Digital Assets. Journal of International Financial Markets, Institutions and Money. 92 101981. https://doi.org/10.1016/j.intfin.2024.101981

Do returns and volatility spillovers exist across tech stocks, cryptocurrencies and NFTs?
Sivaprasad, S., Bas, T. and Malki, I. 2024. Do returns and volatility spillovers exist across tech stocks, cryptocurrencies and NFTs? Heliyon. 10 (2) e24615. https://doi.org/10.1016/j.heliyon.2024.e24615

Does R&D Investment Drive Employment Growth? Empirical Evidence using Industry-Level from Japan
Shah, I.H., Kollydas, K., Lee, P.Y., Malki, I. and Chu, C. 2024. Does R&D Investment Drive Employment Growth? Empirical Evidence using Industry-Level from Japan. International Journal of Finance & Economics. 29 (1), pp. 102-118. https://doi.org/10.1002/ijfe.2677

Spill over effects of Geopolitical risk on the banking sector of CIS countries
Sivaprasad, S., Malki, I., Adami, R., Yodgorova, F. and Ibragimova, D. 2023. Spill over effects of Geopolitical risk on the banking sector of CIS countries. International Finance and Banking Society (IFABS), Oxford (2023). Oxford 24 - 26 Jul 2023 University of Westminster.

An Impact Investment Strategy
Juddoo, K., Malki, I., Mathew, S. and Sivaprasad, S. 2023. An Impact Investment Strategy. Review of Quantitative Finance and Accounting. 61, pp. 177-211. https://doi.org/10.1007/s11156-023-01149-0

Comparative Analysis of Ethnic Minority Occupational Attainments in the UK 2014-2018
Kausar, R. and Malki, I. 2022. Comparative Analysis of Ethnic Minority Occupational Attainments in the UK 2014-2018. SSRN. https://doi.org/10.2139/ssrn.4090544

The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces
Enowbi Batuo, M., Kararach, G. and Malki, I. 2022. The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces. World Development. 157 105939. https://doi.org/10.1016/j.worlddev.2022.105939

Corporate social performance and financial risk: Further empirical evidence using higher frequency data
Ayton, Julie, Krasnikova, N. and Malki, I. 2022. Corporate social performance and financial risk: Further empirical evidence using higher frequency data. International Review of Financial Analysis. 80 (March) 102030. https://doi.org/10.1016/j.irfa.2022.102030

On the long-run dynamics of income and wealth inequality
Ghoshray, A., Malki, I. and Ordóñez, J. 2022. On the long-run dynamics of income and wealth inequality. Empirical Economics. 62, pp. 375-408. https://doi.org/10.1007/s00181-021-02043-1

An Impact Investment Strategy
Sivaprasad, S., Juddoo, K., Malki, I. and Mathew, S. 2021. An Impact Investment Strategy. International Finance and Banking Society(IFABS) 2021. online 13 - 15 Sep 2021

The Case of the United Kingdom: Mapping Localism, Resilience, and Civic Activism in Response to the COVID-19 Pandemic
Bradley, T., Malki, I., Ziniel, C. and Ghalib, A. 2021. The Case of the United Kingdom: Mapping Localism, Resilience, and Civic Activism in Response to the COVID-19 Pandemic. International Journal of Social Quality. 11 (1/2), pp. 145-175. https://doi.org/10.3167/IJSQ.2021.11010209

Variations in the determinants of regional development disparities in rural China
Zheng L., Shepherd, D. and Enowbi Batuo, M. 2021. Variations in the determinants of regional development disparities in rural China. Journal of Rural Studies. 82, pp. 29-36. https://doi.org/10.1016/j.jrurstud.2020.08.011

The share of the global energy mix: Signs of convergence?
Ghoshray, A. and Malki, I. 2021. The share of the global energy mix: Signs of convergence? Bulletin of Economic Research. 73 (1), pp. 34-50. https://doi.org/10.1111/boer.12232

A Structural Break Approach to Analysing the Impact of the QE Portfolio Balance Channel on the US Stock Market
Shah, I., Schmidt-Fisher, F., Malki, I. and Hatfield, R. 2019. A Structural Break Approach to Analysing the Impact of the QE Portfolio Balance Channel on the US Stock Market. International Review of Financial Analysis. 64, pp. 204-220. https://doi.org/10.1016/j.irfa.2019.05.010

Biosynthesis of spathulenol and camphor stand as a competitive route to artemisinin production as revealed by a new chemometric convergence approach based on nine locations’ field-grown Artemesia annua L.
Chemat, S., Boudjelal, S., Malki, I. and Lapkin, A. 2019. Biosynthesis of spathulenol and camphor stand as a competitive route to artemisinin production as revealed by a new chemometric convergence approach based on nine locations’ field-grown Artemesia annua L. Industrial Crops and Products. 137, pp. 521-527. https://doi.org/10.1016/j.indcrop.2019.05.056

A Note on the Modelling and Interpretation of a Public Goods Game Experiment
Lucas, P. and Malki, I. 2019. A Note on the Modelling and Interpretation of a Public Goods Game Experiment. Journal of Applied Statistics. 46 (4), pp. 737-753. https://doi.org/10.1080/02664763.2018.1508562

Is information diffusion a threat to market power for financial access? Insights from the African banking industry
Asongu, S., Enowbi Batuo, M., Nwachukwu, J. and Tchamyou, V. 2018. Is information diffusion a threat to market power for financial access? Insights from the African banking industry. Journal of Multinational Financial Management. 45, pp. 88-104. https://doi.org/10.1016/j.mulfin.2018.04.005

Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa
Enowbi Batuo, M., Mlambo, Kupukile and Asongu, Simplice 2018. Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa. Research in International Business and Finance. 45, pp. 168-179. https://doi.org/10.1016/j.ribaf.2017.07.148

The Impact of Regional and Institutional Factors on Labour productive Performance Evidence from China
Enowbi Batuo, M., Zheng, L. and Shepherd, D. 2017. The Impact of Regional and Institutional Factors on Labour productive Performance Evidence from China. World Development. 96, pp. 591-598. https://doi.org/10.1016/j.worlddev.2017.04.006

The Role of Higher Education on Economic Development: Theory and Empirical Evidence from the MENA Countries
Malki, I. 2017. The Role of Higher Education on Economic Development: Theory and Empirical Evidence from the MENA Countries. La revue des sciences commerciales (The Review of Business). 16 (2), pp. 71-83.

The Impact of Regional and Institutional Factors on Labour productive Performance: Evidence from the Township and Village Enterprise Sector in China
Zheng, L., Enowbi Batuo, M. and Shepherd, D. 2017. The Impact of Regional and Institutional Factors on Labour productive Performance: Evidence from the Township and Village Enterprise Sector in China. World Development. 96, pp. 591-598. https://doi.org/10.1016/j.worlddev.2017.04.006

Microfinance and Household Poverty Reduction: Empirical Evidence from Rural Pakistan
Ghalib, A.K., Malki, I. and Imai, K. 2015. Microfinance and Household Poverty Reduction: Empirical Evidence from Rural Pakistan. Oxford Development Studies. 43 (1), pp. 84-104. https://doi.org/10.1080/13600818.2014.980228

The impact of liberalisation policies on poverty and inequality in African countries
Enowbi Batuo, M. and Asongu, S. 2015. The impact of liberalisation policies on poverty and inequality in African countries. Journal of Economic Studies. 42 (1), pp. 68-100. https://doi.org/10.1108/JES-05-2013-0065

The role of telecommunications infrastructure in the regional economic growth of Africa
Enowbi Batuo, M. 2015. The role of telecommunications infrastructure in the regional economic growth of Africa. Journal of Developing Areas. 49 (1), pp. 313-330. https://doi.org/10.1353/jda.2015.0005

The causal relationship between private and public investment in Zimbabwe
Muyambiri, B., Chiwira, O., Ngonidzashe, C. and Enowbi Batuo, M. 2012. The causal relationship between private and public investment in Zimbabwe. British Journal of Economics, Management & Trade. 2 (3), pp. 239-264. https://doi.org/10.9734/BJEMT/2012/1213#sthash.vRIGH6Eu.dpuf

Financial development and income inequality: evidence from African countries
Enowbi Batuo, M., Guidi, F. and Kupukile, M. 2011. Financial development and income inequality: evidence from African countries. African Development Bank Conference.

Testing the weak-form market efficiency and the day of the week effects of some African countries
Enowbi Batuo, M., Guidi, F. and Kupukile, M. 2010. Testing the weak-form market efficiency and the day of the week effects of some African countries. The African Finance Journal. 12, pp. 1-26.

The trade specialization of SANE: evidence from manufacturing industries
Enowbi Batuo, M. and Alessandrini, M. 2010. The trade specialization of SANE: evidence from manufacturing industries. The European Journal of Comparative Economics. 7 (1), pp. 145-178.

How can economic and political liberalisation improve financial development in African countries?
Enowbi Batuo, M. and Mlambo, K. 2009. How can economic and political liberalisation improve financial development in African countries? Journal of Financial Economic Policy. 2 (1), pp. 35-59.

Permalink - https://westminsterresearch.westminster.ac.uk/item/w20y4/the-dynamics-of-income-inequality-in-africa-an-empirical-investigation-on-the-role-of-macroeconomic-and-institutional-forces


Share this

Usage statistics

36 total views
28 total downloads
These values cover views and downloads from WestminsterResearch and are for the period from September 2nd 2018, when this repository was created.