The Consumption, Income, and Wealth of the Poorest: An Empirical Analysis of Economic Inequality in Rural and Urban Sub-Saharan Africa for Macroeconomists

Leandro de Magalhaes and Raul Santaeulalia-Llopis ()

No 459, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: We provide new empirical insights on the joint distribution of consumption, income, and wealth using cross-sectional and panel data from three of the poorest countries in the world — Malawi, Tanzania, and Uganda — all located in Sub-Saharan Africa (SSA). While income inequality in SSA is similar to that of the United States, consumption and wealth inequality are substantially lower in SSA. This gives rise to our two main findings for SSA: (i) a low transmission from income inequality to wealth inequality related to a low ability to accumulate wealth; and (ii) a low transmission from income inequality to consumption inequality related to a high ability to insure consumption. These results reveal a negative relationship—and potentially a trade-off—between accumulation and consumption insurance for SSA. Our results are more salient in rural areas than in urban areas.

Date: 2018
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Related works:
Journal Article: The consumption, income, and wealth of the poorest: An empirical analysis of economic inequality in rural and urban Sub-Saharan Africa for macroeconomists (2018)
Working Paper: The Consumption, Income, and Wealth of the Poorest: An Empirical Analysis of Economic Inequality in Rural and Urban Sub-Saharan Africa for Macroeconomists (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:459

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