Sub-Saharan Africa’s Diverging Inequality Trends, 1991-2011: A Structuralist Interpretation

The paper first documents the evolution of consumption inequality in 29 Sub-Saharan African countries over 1991-2011 on the basis of a new dataset accounting for over 80% of the population and GDP of the region. The study identifies a trend bifurcation, with 17 countries showing a decline in inequality and 12 an increase. Second, the paper aims at identifying the determinants of the observed inequality divergence by means of a theoretical discussion, summary review of the literature, and multivariate regression analysis. The results indicate that the main cause of such changes were shifts in output structure among sectors characterized by different levels of inequality. Within-sector inequality linked to skill-biased technical change significantly affected inequality in urban areas, but a lack of data did not make it possible to assess the impact of rising land concentration. Income redistribution by means of tax-and-transfers was limited, except in Southern Africa. As for the impact of international variables: an increase in the international prices of oil/metals and cash crops affected inequality by raising the value added shares of mining and agriculture. Remittances were found to be equalizing, while FDIs were un-equalizing and ODA non-significant. A decline in the incidence of HIV-AIDS and conflict intensity reduced inequality in a limited but statistically significant way. JEL Codes: C33, E26, J11, O11, Q15.