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Working Paper 353 - Inequality and the role of macroeconomic and institutional forces in Africa

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Abstract
This paper attempts to offer an empirical assessment of the main macroeconomic and institutional drivers of inequality in Africa. We also propose a two-step econometric methodology to account for the distributional properties of income per capita of economies in our sample. We employ panel data models and data sets encompassing 52 African countries. spanning the years 1980–2017. The findings suggest that (i) income per capita in Africa is divergent and there exist groups or “clubs” of convergence, (ii) the Kuznets’s curve relationship holds only for economies at the bottom of the income distribution, and (iii) macroeconomic and institutional factors play a limited role across African economies. This last finding shows that the distributional property of income may offer insight into which economic forces could help to reduce inequality in Africa.

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  • Batuo E. Michael & George Kararach & Issam Malki, 2021. "Working Paper 353 - Inequality and the role of macroeconomic and institutional forces in Africa," Working Paper Series 2479, African Development Bank.
    • Handle: RePEc:adb:adbwps:2479
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    Keywords

    Income convergence and distribution; income inequality; macroeconomics and institutional effects; Africa JEL classification: C33; O4; F15; D63;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • F15 - International Economics - - Trade - - - Economic Integration
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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