Income Disparity and Kuznets Hypothesis: The Case of Nigeria

Emmanuel O. Okon ()

Growth, 2020, vol. 7, issue 1, 13-19

Abstract: Mixed results have been produced from empirical studies on income disparity and expansion of the economic. Using current data, this work examines the existence of a Kuznets sort trade-off linking economic growth and income disparity in Nigeria for the period1980-2018 by employing Fully Modified Ordinary Least Square (FMOLS) procedure. The time series characteristics evaluation indicated that the variables are integrated of order one, I(1) and cointegrated which justifies deployment of the FMOLS. The summary of the FMOLS outcome is that Kuznets genre trade-off connecting economic expansion and income disparity in Nigeria does not exist in the long run. The paper further analyzed a variety of socioeconomic variables on Nigeria’s Gini coefficient and the results of the FMOLS multivariate regression indicates that income variation is propelled by inherent reasons like age, tax policy trade gross national expenditure and trade openness. However, public policy should be put in place that could possibly bring to bear a categorical impact on minimizing income disparity via economic measures that encourage broad pension coverage, appropriate tax policy, trade openness, and gross national expenditure.

Keywords: Nigeria; Kuznets curve; Income inequality; GDP per capita; FMOLS method; Economic expansion; Cointegration model; Augmented Dickey Fuller (ADF) test. (search for similar items in EconPapers)
Date: 2020
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