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The consumption, income, and wealth of the poorest: cross-sectional facts of rural and urban Sub-Saharan Africa for macroeconomists

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  • De Magalhaes,Leandro
  • Santaeulalia-Llopis,Raul
Abstract
This paper provides new empirical insights on the joint distribution of consumption, income, and wealth in three of the poorest countries in the world ? Malawi, Tanzania, and Uganda ? all located in Sub-Saharan Africa (SSA). The first finding is that while income inequality is similar to that of the United States (US), wealth inequality is barely one-third that of the US. Similarly, while the top of the income distribution (1 and 10 percent) earns a similar share of total income in SSA as in the US, the share of total wealth accumulated by the income-rich in SSA is one-fifth of its US counterpart. The main contributions of the paper are to document: (i) this dwarfed transmission from income to wealth, which suggests that SSA households face a larger inability to save and accumulate wealth compared with US households; and (ii) a lower transmission from income to consumption inequality, which suggests the presence of powerful institutions that favor consumption insurance to the detriment of saving. These features are more relevant for rural areas, which represent roughly four-fifths of the total population. The paper identifies the few successful pockets of the SSA population that are able to accumulate wealth by exploring sources of inequality such as age, education, migration, borrowing ability, and societal systems.

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  • De Magalhaes,Leandro & Santaeulalia-Llopis,Raul, 2015. "The consumption, income, and wealth of the poorest: cross-sectional facts of rural and urban Sub-Saharan Africa for macroeconomists," Policy Research Working Paper Series 7337, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7337
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    3. Chaoran Chen & Diego Restuccia & Raül Santaeulàlia-Llopis, 2023. "Land Misallocation and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 441-465, April.

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    More about this item

    Keywords

    Economic Theory&Research; Population Policies; Rural Poverty Reduction; Inequality; Climate Change Economics;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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