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Growth effect of income inequality in sub-Saharan Africa: exploring the transmission channels

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  • Odusanya Ibrahim Abidemi

    (Department of Economics, Olabisi Onabanjo University, P.M.B. 2002, Ago-Iwoye, Nigeria.)

  • Akinlo Anthony Enisan

    (Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria.)

Abstract

Sub-Saharan Africa (SSA) ranks as the second most unequal region globally (in terms of income distribution), harboring 10 of the 19 most unequal countries in the world. This paper explores the channels through which income inequality exerts its effects on economic growth in SSA. The study spans the period 1995–2015, focusing on 31 SSA countries. Findings from the two-step system generalized method of moments suggest that income inequality exerts a significant positive effect on economic growth via the saving transmission channel, while it has a statistically significant negative effect on economic growth in the region through the channels of fertility, credit market imperfection, and fiscal policy.

Suggested Citation

  • Odusanya Ibrahim Abidemi & Akinlo Anthony Enisan, 2020. "Growth effect of income inequality in sub-Saharan Africa: exploring the transmission channels," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 56(2), pages 176-190, June.
    • Handle: RePEc:vrs:ijomae:v:56:y:2020:i:2:p:176-190:n:5
    DOI: 10.2478/ijme-2020-0012
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    More about this item

    Keywords

    income inequality; growth; transmission; channels; Africa;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • N47 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Africa; Oceania

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