Batuo Enowbi, 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
| Title | The dynamics of income inequality in Africa: An empirical investigation on the role of macroeconomic and institutional forces |
|---|---|
| Type | Journal article |
| Authors | Batuo Enowbi, M., Kararach, G. and Malki, I. |
| Abstract | Reducing income inequality is a crucial goal of sustainable development, as income inequality is 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 differs 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. |
| Keywords | Income convergence and distribution |
| Income inequality | |
| Macroeconomics and institutional effects | |
| Africa | |
| Article number | 105939 |
| Journal | World Development |
| Journal citation | 157 |
| ISSN | 0305-750X |
| Year | 2022 |
| Publisher | https://www.sciencedirect.com/science/article/pii/S0305750X22001292 |
| 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://doi.org/10.1016/j.worlddev.2022.105939 |
| Publication dates | |
| Published in print | Sep 2022 |
| Published online | 16 May 2022 |