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Effects of public debt on income inequality in sub-Saharan Africa: exploring the direct and indirect transmission channels

Author

Listed:
  • Idrissa Zida

    (Thomas Sankara University)

  • Idrissa Ouedraogo

    (Thomas Sankara University)

  • Relwendé Sawadogo

    (Joseph Ki-Zerbo University)

Abstract

This research analyses the effects of public debt on income inequality in Sub-Saharan Africa. The analysis covers a panel of 38 countries over the period 2002–2021. It uses the Generalized Method of Moments (GMM) in a two-step system and Structural Equation Modelling (SEM). The results show that public debt reduces income inequality, particularly in countries with high levels of inequality. It reduces income inequality through the quality of institutions and the development of human capital. These results suggest that public debt can be directed towards the inclusive development of human capital and the improvement of institutional quality, notably through investments that benefit low-income earners more, either in terms of public service provision or employment, to reduce income inequality.

Suggested Citation

  • Idrissa Zida & Idrissa Ouedraogo & Relwendé Sawadogo, 2025. "Effects of public debt on income inequality in sub-Saharan Africa: exploring the direct and indirect transmission channels," Economic Change and Restructuring, Springer, vol. 58(5), pages 1-37, October.
    • Handle: RePEc:kap:ecopln:v:58:y:2025:i:5:d:10.1007_s10644-025-09920-0
    DOI: 10.1007/s10644-025-09920-0
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