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

Douglas Amuli Ibale, Frédéric Docquier and Zainab Iftikhar

World Development, 2024, vol. 173, issue C

Abstract: We construct a model incorporating labor market frictions to elucidate income disparities among provinces, sectors (formal vs. informal), and skill categories (skilled vs. unskilled) within the Democratic Republic of the Congo. Through quantitative analysis, we demonstrate the significance of technologies, human capital, infrastructure, and labor market frictions in explaining spatial and intra-province inequalities. Although technological disparities emerge as the primary drivers, our findings underscore the presence of strong “O-ring” inequality patterns. This implies that effective development policies necessitate a mix of coordinated policy measures. When considered in isolation, policies focused on enhancing education, infrastructure, and mitigating labor market frictions could potentially escalate poverty along the intensive margin. Additionally, a development policy disregarding the informal sector also yields counterproductive distributional and poverty outcomes.

Keywords: Informality; Inequality; Labor market frictions; O-ring theory of development (search for similar items in EconPapers)
JEL-codes: C23 F22 I11 J61 O15 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Spatial Inequality, Poverty and Informality in the Democratic Republic of the Congo (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:173:y:2024:i:c:s0305750x23002292

DOI: 10.1016/j.worlddev.2023.106411

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