Free DP Download 10 June 2021 - Measuring historical income inequality in Africa: What can we learn from social tables?

Thursday, June 10, 2021

Measuring historical income inequality in Africa: What can we learn from social tables?
Jutta Bolt, Michiel De Haas, Ellen Hillbom, Federico Tadei
CEPR DP No. 16218 May 2021

Limited knowledge of African inequality trajectories hampers our understanding of the drivers of heterogeneous inequality outcomes in Africa today, and leads to a major omission in debates about global inequality. In recent years, African economic history has advanced towards the reconstruction of full income distributions of African economies using 'social tables'.

A new CEPR study by Jutta Bolt, Michiel De Haas, Ellen Hillbom and Federico Tadei takes stock of the social table literature covering the cases of Botswana, Ghana, Ivory Coast, Kenya, Senegal, and Uganda, 1910s to 1960s, and propose a new analytical framework to study income inequality in colonial Africa, revolving around export-oriented commercialisation and colonialism. Among the findings:

  • Inequality increased as commercialisation progressed.  
  • Relative levels of inequality differed substantially and were linked to European settlers and colonial institutions. 
  • Capital-intensive commodities were associated with larger inequality in the self-employed sector and the presence of European settlers and a large colonial administration increased the salience of race as a major fault line.
  • Overall African inequality increased between 1910 and 1965, but there is substantial heterogeneity between colonies and those with large European presence ranks as the most unequal.
  • Colonial policies and expatriate presence are a primary explanation for high income inequality levels, both indirectly and through a direct effect of the presence of a large colonial bureaucracy.
  • Particular resource requirements and commodity characteristics mediated the effect of commercialisation and were the primary driver of inequality trends, both for Africans and non-Africans and particularly in capital intensive agricultural production.

Overall, the authors conclude that colonial policies and settler presence had a large influence on relative levels of income inequality, while trends were primarily driven by processes of commercialisation, which were mediated by existing social inequality, resource requirements, and colonial policies..

Figure 1: Drivers of changing income inequality in Africa

 


 

 

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