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Spatial Inequality, Poverty and Informality in the Democratic Republic of the Congo

Author

Listed:
  • Iftikhar, Zainab
  • Amuli Ibale, Douglas
  • Docquier, Frédéric

Abstract

We build a two-sector model with labor market frictions to explain income disparities between provinces, sectors (formal vs. informal), and skill groups (skilled vs. unskilled) in the Democratic Republic of the Congo. We then parameterize the model to match observed income and employment data. We conduct a set of counterfactual “policy†experiments, to analyze the role of technologies, human capital, infrastructure, and labor market frictions in explaining spatial and within-province inequalities. We highlight strong "O-ring'' inequality patterns, implying that successful development policies involve a combination of coordinated policy actions. While spatial inequalities are mostly determined by technological disparities, a development policy that disregards the informal sector has anti-redistributive effects. Taken in isolation, policies targeting education, infrastructure, and labor market frictions can increase inequality and poverty, at least along the intensive margin.

Suggested Citation

  • Iftikhar, Zainab & Amuli Ibale, Douglas & Docquier, Frédéric, 2022. "Spatial Inequality, Poverty and Informality in the Democratic Republic of the Congo," CEPR Discussion Papers 17195, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17195
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    Keywords

    Informality; Inequality; Labor market frictions; O-ring theory of 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
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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