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The Consumption, Income, and Wealth of the Poorest: An Empirical Analysis of Economic Inequality in Rural and Urban Sub-Saharan Africa for Macroeconomists

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  • Leandro Magalhaes
  • Raül Santaeulàlia-Llopis

Abstract

We provide new empirical insights on the joint distribution of consumption, income, and wealth using cross-sectional and panel data from three of the poorest countries in the world—Malawi, Tanzania, and Uganda—all located in Sub-Saharan Africa (SSA). While income inequality in SSA is similar to that of the United States, consumption and wealth inequality are substantially lower in SSA. This gives rise to our two main findings for SSA: (i) a low transmission from income inequality to wealth inequality related to a low ability to accumulate wealth; and (ii) a low transmission from income inequality to consumption inequality related to a high ability to insure consumption. These results suggest a trade-off between accumulation and consumption insurance for SSA. Our results are more salient in the rural areas than in the urban areas of SSA.

Suggested Citation

  • Leandro Magalhaes & Raül Santaeulàlia-Llopis, 2017. "The Consumption, Income, and Wealth of the Poorest: An Empirical Analysis of Economic Inequality in Rural and Urban Sub-Saharan Africa for Macroeconomists," Working Papers 1000, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:1000
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    Keywords

    macroeconomy; consumption; income; Wealth; Sub-Saharan Africa; Inequality; cross-sectional data; panel data;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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