The Impact Of Income Inequality On Economic Growth In Sub-Saharan Africa
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Date
2021-12
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University Of Ghana
Abstract
The main focus of this research is to examine the impact of income inequality on the economic growth using the Palma ratio and Gini index. The scope of the study is Sub-Sahara African countries. The two-step System Generalized Method of Moment (GMM) estimator was used in analyzing secondary panel data of 47 SSA countries spanning from 2000-2018. The Palma ratio and Gini coefficient were used as a measure for income inequality. After measuring the effect of unequal access to finance, unequal access to the labour market, and unequal access to education on income inequality, the outcome of the study revealed that, unequal access to finance had a positive and significant effect on the income inequality, unequal access to the labour market had a positive and significant effect on income inequality and unequal access to education also had a positive effect on income inequality. Also, the study found that government expenditure and fertility rate had significant and mitigating effect on income inequality. Population growth rate had negative and significant effect on income inequality. In measuring the effect of income inequality on economic growth, the result revealed that, income inequality had a negative and significant effect on economic growth. Furthermore, unequal access to finance, unequal access to the labour market, and unequal access to education negatively and significantly affected economic growth. Government expenditure and fertility rate had negative and significant effect on economic growth. The study recommends that much attention be given to unequal access to finance, labour market, and education because of their association with income inequality and economic growth. They tend to increase income distribution disparities and lower the economic growth of Sub-Saharan African countries.
Keywords: Income Inequality, Economic Growth
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MPhil. Finance
Keywords
Economic Growth, Income Inequality