The paper examines the drivers of income inequality and finds that education remains the key determinant of income inequality. At the same time, income differences between regions are narrowing suggesting an indication of regional convergence on average income. While government’s fiscal targeting of the lagging areas and rural areas might explain the observed convergence in average income across geographical areas, there are other emerging development challenges that require further refinement for the current targeting. Access to public extension programs such as the National Agricultural Advisory Services (NAADS), which are intended to enhance agricultural production and productivity is skewed to well-to-do households and not evenly distributed across region. Similar observations are noted in terms of access to community infrastructure. There is also need to ensure that the benefit of economic growth reach the poorest in a way that expands their opportunities.
This paper covers questions about growth and equity, it gives background information on Uganda, challenges the country is facing in achieving growth and equity, and tries to asses policies that can be set to achieve the inclusive growth agenda.
The study uses a comprehensive household income and expenditure survey with a sample of 245 respondents representing urban and rural households in the Renk County of South Sudan to assess the prevalence of poverty and inequality in the study area. The cost of basic needs was used ; to establish both food poverty line and Poverty line; estimated poverty incidence, gap and severity; and estimated different equality measures. Major results show that 87% and 73% of the urban and rural households respectively fall below our calculated poverty lines. The estimated
Gini coefficient was 18% and 20% for urban and rural households, respectively. Results of other equality measures show higher inequality between the poorest and richest segments of households as the richest quintile among urban households consumes 5 times that of the poorest, while that of the rural households consumes 4 4 folds the poorest quintile.
Existing empirical studies on the relation between inequality and growth have been criticized for their focus on income inequality and their use of cross-country data sets. Schipper and Hoogeveen use two sets of small area welfare estimates-often referred to as poverty maps-to estimate a model of rural per capita expenditure growth for Uganda between 1992 and 1999. They estimate the growth effects of expenditure and education inequality while controlling for other factors, such as initial levels of expenditure and human capital, family characteristics, and unobserved spatial heterogeneity. The authors correct standard errors to reflect the uncertainty due to the fact that they use estimates rather than observations. They find that per capita expenditure growth in rural Uganda is affected positively by the level of education as well as by the degree of education inequality. Expenditure inequality does not have a significant impact on growth
This paper seeks to shed light on the determinants of this large increase in inequality. It exploits the availability of two comparable household surveys to decompose changes in inequality based on a set of counterfactual scenarios. The micro simulation approach builds on the methodology discussed in Bourguignon, Ferreira and Lustig (1998) and applied in Bourguignon, Ferreira and Leite (2007). The main finding is that the increase in inequality was driven mostly by changes in returns to household characteristics, and especially by changes in the returns to education.. In addition, it is worth noting that the new profile of urban households, and in particular the greater likelihood of being households with younger heads, well educated, living alone or in couples with no children also contributed to increased inequality, as these types of households experienced higher growth rates in consumption per capita.
The broad messages of the report are highlighted here under four headings: first, the scale of the challenges; second, drivers of poverty and inequality in the evolution of income earning opportunities and basic services; third, the budget as an instrument for addressing poverty and inequality objectives; and fourth, excluded groups. The focus is on the medium term, but framed by immediate post-crisis needs and priorities
This paper examines the how the spatial incidence of poverty explains the extent of inclusive growth in Uganda i.e. whether some geographical regions have better endowments of the assets that generate income and thus lower poverty or better rates of returns on assets. We find that the endowment effects are somewhat larger than the returns effects. If the other regions of Uganda had the Central region’s (richest) endowments of physical and social infrastructure, they would have a 20-25 % increase in consumption expenditures. Our results suggest that there is not too severe a trade-off between equity and efficiency in public infrastructure investments, because returns are similar in the less well- endowed regions to those in Central region. Thus, any attempt to distribute social and physical infrastructure more equitably will not be very costly in terms of sacrificed rates of return.
This paper investigates the relationship between economic growth and poverty in Tanzania. The decomposition analysis has been carried out to establish: What would have been the poverty level if only the mean income had changed without any changes in the distribution of income? Secondly, what would have been the poverty level if the distribution of income had changed without changes in the mean income level? The decomposition analysis findings show that if inequality would have been as constant as estimated in URT (2012), then the poverty reduction as measured by the FGT would have decreased more than what is stipulated.
This Brief analyzes the linkage between inequality, poverty and economic growth in addition to assessing the extent to which growth in Kenya has been pro-poor. It also explores the link between institutions, poverty and inequality. The macroeconomic indicators show that economic growth in Kenya recorded an upward trend between 1994 and 1996 but dropped significantly in 1997. This was followed by a period of impressive recovery up to 2007. During the same period, poverty increased by 13% between 1994 and 1997, but declined by about 5% in 2005/6. Inequality however increased over the period, frustrating the impact of growth on poverty reduction.
As social inequalities in Kenya continue to widen, Samuel Abonyo argues that policies that encourage the redistribution of wealth are what the country needs if it is to achieve economic growth and reduce poverty.