Nkechi S. Owoo is a Senior Lecturer at the Department of Economics, University of Ghana. Her research focuses on spatial and demographic economics in developing economies.
Development economists focus significant attention on several dimensions of inequality, and how it relates to over-all economic progress. Research presented at CSAE 2019 touched on both income inequality and intra-household issues, highlighting many challenges as well as some policy avenues that have the potential to close those gaps.
Current trends in inequality
The rich are getting richer in Mozambique. Gradín puts a new spin on the ever-salient issue of measuring the contributions of sub-populations to total inequality. He employs the Recentered Influence Function (RIF), which is easier to compute relative to other inequality indices, and also provides higher consistency in the decomposition of inequality by subpopulations. The author finds that richest, highly educated, and urban population as having disproportionally contributed to high and increasing inequality in Mozambique.
In South Africa, there is a squeeze on the middle class. Bhorat et al. also employ RIF regressions in exploring reasons for observed wage inequality in post-apartheid South Africa. They note that the bottom and top percentiles of the wage distribution have experienced higher wage growth relative to those in the middle; at the lower end of the wage distribution due to rising minimum wages, while at the top end due to skills-based developments. Workers in the middle of the distribution have suffered from an oversupply of similarly educated entrants, as well as the decline of manufacturing jobs.
How the poor stay poor: intergenerational mobility depends more on ethnic capital than parental outcomes. Using data from eight African countries Funjika et al. show that an individual’s family of origin, that is, ethnic capital, plays a large role in intergenerational mobility, and this effect often overpowers the importance of parental human capital. Comparing former British and French colonies in Africa, they find that while parental human capital is more important for intergenerational mobility in former French colonies, ethnic capital is more important in former English colonies, which may be linked to differing education systems.
The relationship between inequality and growth is still ambiguous. Balcilar et al. show that in a political economy mechanism where government spending is used for the provision of both production and consumption services, the theoretical relationship between inequality and economic growth is neither positive nor negative but non-linear. They test their hypothesis using data between 1980 and 2010 on a sample of 55 countries at various income levels. Empirical analyses indicate that countries with inequality levels below a Gini index of 35.9 are more likely to experience a positive relationship between inequality and growth, while those with inequality levels beyond the threshold are likely to witness a negative relationship.
Women and children face unique and significant challenges
Schools are in some cases exacerbating inequalities in East Africa. Using data from Kenya, Tanzania and Uganda Anand et al. find that while both household and school factors play independent roles in educational achievement, the assortative matching process, whereby higher ‘quality’ households tend to be matched to higher quality schools, is also determinative. The most disadvantaged students are therefore likely to suffer negative learning outcomes unless educational reforms are implemented to alter the distribution of school quality, for example through the allocation of teachers across schools.
Intra-household distribution is often unequal, and deserves better measurement. Most surveys collect information on expenditures at the household level, despite some indication that distribution of household resources, may be unequal among members of the household. Olivier et al. use data from Bangladesh to compute individual shares of total household resources. They argue that given the presence of large within-household inequalities and discrimination against specific household members, collective models of consumption, where welfare analysis is conducted at the individual level using assignable goods, rather than the traditional per-capital (or per adult equivalent) expenditure models, are preferable.
Economic progress can put women at risk: In Nigeria, occupational prestige may engender domestic violence. At least 25% of Nigerian women report having been a victim of intimate partner violence (IPV). Women’s experience of IPV has often been related to women’s ownership of economic resources; and in my research, my own research finds that the rise in female labour force participation vis-à-vis the country’s patriarchal system that discourages it, may encourage violent tendencies by male partners. Using a classification system that ranks occupations by social prestige, I show that the prestige rankings of spouses are an important predictor of violence in Nigerian households. Specifically, women in similar and more prestigious occupations than their husbands are more likely to experience spousal abuse.
Opportunities to close these inequality gaps
Education can encourage female labor force participation. Malta et al. use a theoretical experiment to examine how government policies on education in Senegal might help to increase women’s labour force participation and, by extension, their welfare outcomes. They find that increased primary education not only increases the productivity and labour force participation of females, but also reduces the gender wage gap.
Investing in gender equality can make a difference. Gender budgeting has been described as the use of budgets and fiscal measures and institutions by governments to promote women’s development and gender equality. Kolovich and Levya create a novel counter-factual to explore what would have happened if fiscal policies aimed at gender equality were not implemented in Uganda and Rwanda. Their results show favorable effects of gender budgeting on a variety of women’s welfare outcomes: Gender budgeting increased years of education and the probability of delivering one’s baby in a health facility. It also increased women’s access to electricity and reduced the time spent on collecting water.
Education can play a positive role in changing gender norms. Social interaction has been noted to play an important role in spreading new ideas, and in shifting societal norms. Using Demographic and Health Surveys from across Africa Adriano et al. show evidence of social diffusion of norms about male dominance in decision-making. Education is identified as the main path through which the spatial diffusion of norms occurs. They argue that schools facilitate the diffusion of certain ideas and practices that can discourage male dominance. In schools, individuals have the opportunities to interact with others in new ways and to perform new gender roles for the first time.
Gender wage gaps are closing with improvements in youth labour participation in post-Apartheid South Africa. Labour market transformations aimed at eliminating these inequalities between white and black South Africans have been implemented since 1994, and Mosomi finds that these have been largely successful. In the post-apartheid period, younger cohorts of black South Africans have experienced increases in wages over time, largely attributable to increases in education. The evidence is particularly impressive for women. Younger cohorts of women experience much higher wages compared to women in the apartheid period.
