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Structural Transformation and Inequality: A Sectoral Analysis for Low- and Middle-income Countries

Author

Listed:
  • Margaret Rutendo Magwedere

    (University of South Africa)

  • Godfrey Marozva

    (University of South Africa)

Abstract

"The study examined the impact of structural transformation to inequality using a panel of low- and middle-income countries from 1996 - 2018. The system generalised method of moments was used to determine the effect of value-added of each sector to income inequality for the countries in the study. Increase in value-added for the mining and construction sectors reduces inequality whilst inequality increased with an increase in value-added for the agriculture and manufacturing sectors. Thus, for the countries in this study mining and construction driven structural transformation has an inequality reducing effect whereas there is a possibility that further structural transformation has no effect to reducing inequality. This implies that there is a probability of an increase in inequality due to further structural transformation. The implication for policy is a consideration of a channel of structural transformation that is suitable for a specific economy."

Suggested Citation

  • Margaret Rutendo Magwedere & Godfrey Marozva, 2024. "Structural Transformation and Inequality: A Sectoral Analysis for Low- and Middle-income Countries," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 16(4), pages 423-441, December.
    • Handle: RePEc:ren:journl:v:16:y:2024:i:4:p:423-441
    DOI: https://doi.org/10.15353/rea.v16i4.5419
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    More about this item

    Keywords

    inequality; structural transformation; change; sector; countries; income distribution; system-GMM; value-added; development;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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