Income Inequality and Redistribution In Sub-Saharan Africa

The theoretical expectation postulated by standard economic theory is that high inequality would lead to higher redistribution via the collective action of the median voter. In this paper, we adopt an instrumental variable approach to test the median voter hypothesis with specific reference to sub-Saharan Africa (SSA). Overall, we find a positive relationship between inequality and redistribution, especially among middle income countries, which is driven by the abundance of natural resource rents. Thus, our results do not provide strong evidence to support the median voter theorem, but instead, call for alternative interpretations, more closely to the existence of multiple steady states.