Informal Settlements & Consumption Gaps: Decomposing the Urban-Rural Consumption Gap Within African Countries

Regional inequality, epitomised by the urban-rural consumption gap, is considerable in the developing world. I use a city-based approach to decompose the gap in ten sub-Saharan African countries, evaluating living standards by proximity to cities (in rural areas) and size of cities (in urban areas). I further decompose the consumption gap by incorporating urban informal settlements (‘slums’). Despite the prominence of slums in sub-Saharan Africa, they are under-studied as they are difficult to identify and connect with survey data. I address those challenges by (i) creating the first transcontinental map of slums; and (ii) improving upon current best practice in connecting spatial and survey data in sub-Saharan Africa. Within slums, I proxy for the formality of housing by creating a tool that measures how regularly – on orthogonal axes – buildings are laid out. To measure living standards, I implement the approach of the seminal paper measuring consumption gaps, Young (2013), via Item Reponse Theory. I use the detailed regional decomposition of living standards to reevaluate potential explanations for the urban-rural divide.