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Why Is Inequality High in Africa?†

Author

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  • Abebe Shimeles
  • Tiguene Nabassaga

Abstract

This paper computed asset-based inequality for 38 African countries in multiple waves, using over a million household histories, to study why inequality tends to be persistently high in Africa. The results show that within-country asset inequality is positively correlated with the returns to higher education, a finding that is corroborated by results showing a negative correlation between consumption-based inequality and the proportion of households that completed tertiary education. Countries with higher remittance flows also experienced lower inequality, whereas assets and goods market distortions tended to increase inequality in Africa. The paper also decomposed within-country inequality into components deemed to represent opportunities beyond the control of individuals and those attributed to individual efforts, such as education. At least 30% of asset inequality within countries was, on average, due to inequality of opportunity, though there were considerable differences across countries. In addition, the incidence of child mortality and disease burden of malaria and tuberculosis tended to increase with asset-based inequality of opportunity, which increased with ethnic fractionalisation but decreased with improved governance.

Suggested Citation

  • Abebe Shimeles & Tiguene Nabassaga, 2018. "Why Is Inequality High in Africa?†," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 27(1), pages 108-126.
  • Handle: RePEc:oup:jafrec:v:27:y:2018:i:1:p:108-126.
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    File URL: http://hdl.handle.net/10.1093/jae/ejx035
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    References listed on IDEAS

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    1. Booysen, Frikkie & van der Berg, Servaas & Burger, Ronelle & Maltitz, Michael von & Rand, Gideon du, 2008. "Using an Asset Index to Assess Trends in Poverty in Seven Sub-Saharan African Countries," World Development, Elsevier, vol. 36(6), pages 1113-1130, June.
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    6. Paolo Brunori & Flaviana Palmisano & Vito Peragine, 2015. "Inequality of Opportunity in Sub-Saharan Africa," SERIES 08-2015, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Dec 2015.
    7. François Bourguignon & Francisco H. G. Ferreira & Marta Menéndez, 2007. "Inequality Of Opportunity In Brazil," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 585-618, December.
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