Urbanization and income inequality in Sub-Saharan Africa

Abstract

According to the World Bank, a burgeoning proportion of Africans now live in urban areas. The United Nations notes that the fastest urbanizing regions in the world are Africa and Asia and projects that by the year 2050 these regions would become about 56% and 64% urban, respectively. At the same time, over the last several decades, many countries and regions have recorded rising income inequality. While some scholars have argued that urbanization worsens income inequality, others contend that the relationship is non-linear and dependent on the stage of development. In this regard, Sub-Saharan Africa remains largely understudied. This paper employed an unbalanced panel dataset for 48 Sub-Saharan African countries over the period 1996–2016 to examine whether urbanization is correlated with income inequality. We find evidence of a positive association between urbanization and income inequality in the region.