Effects of public debt on income inequality in sub-Saharan Africa: exploring the direct and indirect transmission channels

Idrissa Zida (), Idrissa Ouedraogo () and Relwendé Sawadogo ()
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Idrissa Zida: Thomas Sankara University
Idrissa Ouedraogo: Thomas Sankara University
Relwendé Sawadogo: Joseph Ki-Zerbo University

Economic Change and Restructuring, 2025, vol. 58, issue 5, No 11, 37 pages

Abstract: Abstract This research analyses the effects of public debt on income inequality in Sub-Saharan Africa. The analysis covers a panel of 38 countries over the period 2002–2021. It uses the Generalized Method of Moments (GMM) in a two-step system and Structural Equation Modelling (SEM). The results show that public debt reduces income inequality, particularly in countries with high levels of inequality. It reduces income inequality through the quality of institutions and the development of human capital. These results suggest that public debt can be directed towards the inclusive development of human capital and the improvement of institutional quality, notably through investments that benefit low-income earners more, either in terms of public service provision or employment, to reduce income inequality.

Keywords: Public debt; Income inequality; Institutional quality; Human capital; Sub-Saharan Africa; E02; H63; J24; O15 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10644-025-09920-0

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