Income Inequality Trends in Sub-Saharan Africa: Explaining Divergence, Determinants and Consequences

In this seminar, Professor Cornia provided insights into income inequality levels and trends in sub-Saharan Africa. He explained why these insights are essential to design better policy responses that would allow growth to be shared more equally in sub-Saharan Africa.

The presentation first reviewed initial conditions: independence, for many African countries, meant the inheritance of a highly polarized income distribution, and this inequality was exacerbated by the free market policies pursued in the 1980s and 1990s. Professor Cornia then analysed the drivers of the bifurcation in inequality trends based on the results of a comprehensive, quantitative study that tested the relevance of a long list of inequality determinants (including indicators for global conditions, domestic policy, and exogenous shocks). He identified a sub-optimal structural evolution of the economy as well as insufficient distribution of land and human capital as key determinants in countries where income inequality has increased.
The research provides important empirical evidence about the inequality impacts of a wide range of factors. It shows that policies that help reduce poverty are not necessarily the same as those that help reduce income inequality—and vice versa. Policies to enhance the quality of education and raise productivity are potent tools for poverty reduction, for example, yet if they are not accompanied by progressive taxation and well-targeted social protection, they could accelerate income disparities. Complementary policies to address both poverty and inequality must go hand in hand.