The consumption, income, and wealth of the poorest: An empirical analysis of economic inequality in rural and urban Sub-Saharan Africa for macroeconomists

• Published in: Journal of development economics Vol. 134; pp. 350 - 371
• Main Authors: De Magalhães, Leandro, Santaeulàlia-Llopis, Raül
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.09.2018
• Subjects: Accumulation; Consumption; Cross-sectional data; Income; Inequality; Insurance; Macroeconomy; Panel data; Sub-Saharan Africa; Wealth; Consumption; E21; Income; I32; Sub-Saharan Africa; Accumulation; O55; O10; Panel data; Insurance; Cross-sectional data; Macroeconomy; Wealth; Inequality
• ISSN: 0304-3878; 1872-6089
• DOI: 10.1016/j.jdeveco.2018.05.014

We provide new empirical insights on the joint distribution of consumption, income, and wealth using cross-sectional and panel household-survey data from three of the poorest countries in the world—Malawi, Tanzania, and Uganda—all located in Sub-Saharan Africa (SSA). Our main contribution is to establish the co-existence of two phenomena in SSA: (i) a low transmission from income inequality to wealth inequality (i.e., low accumulation); and (ii) a low transmission from income inequality to consumption inequality (i.e., high consumption insurance). The variation between rural and urban areas in SSA—and between SSA and the United States of America—reveals a negative relationship, and potentially, a trade-off between accumulation and consumption insurance. •New empirical insights on the joint distribution of consumption, income and wealth.•Cross-sectional and panel household-survey data Sub-Saharan Africa (SSA).•Low transmission from income inequality to wealth and consumption inequality.•Variation between rural and urban areas in SSA—and between SSA and the U.S.•Negative relationship between accumulation and consumption insurance.