Is Inequality Systematically Underestimated in Sub-Saharan Africa ? A Proposal to Overcome the Problem

Fabio Clementi, Michele Fabiani, Vasco Molini () and Francesco Schettino

No 10058, Policy Research Working Paper Series from The World Bank

Abstract: In Africa, evidence on the interactions among poverty, growth, and income distribution presents a puzzle: While growth has been robust in recent decades, the growth elasticity of poverty has remained low. This suggests that inequality has dampened the pro-poor effects of growth. However, when using standard inequality measures, there is only scattered evidence of high and growing inequality in Africa outside the extremely unequal southern cone. This paper argues that inequality mismeasurement could be the main culprit responsible for this paradox: consumption-based measures miss important information at the top end of the consumption distribution, leading to underestimation of inequality. This paper proposes distinct solutions, arguing that by reevaluating the importance of distributional issues in Africa, the need becomes apparent for refreshing the research agenda on African development in such a way that the interaction between poverty and inequality becomes a core concern.

Date: 2022-05-24
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