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Does inequality constrain poverty reduction programs? Evidence from Africa

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  • Fosu, Augustin Kwasi

Abstract

Examined in the present study is the extent to which inequality influences the effectiveness of income growth in poverty reduction, based on 1990s data for a sample of African economies. An analysis-of-covariance model is derived and estimated, with the headcount, gap, and squared gap poverty ratios serving as the respective dependent variables, and the Gini coefficient and PPP-adjusted income as explanatory variables. The study finds that the responsiveness of poverty to income is a decreasing function of inequality. The results imply a large variation across African countries in the amount of growth required to meet a unit of poverty reduction, as in the case of the MDG1, depending on the level of inequality. For efficient policymaking, therefore, a country-specific strategy with varying emphases on inequality relative to growth is warranted.

Suggested Citation

  • Fosu, Augustin Kwasi, 2010. "Does inequality constrain poverty reduction programs? Evidence from Africa," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 818-827, November.
  • Handle: RePEc:eee:jpolmo:v:32:y::i:6:p:818-827
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