Urbanization, economic growth and income inequality in Sub-Saharan Africa

Abstract

The purpose of this study is to analyse the role of economic growth in the relationship between urbanisation and income inequality in Sub-Saharan Africa. Methodologically, we apply the generalised method of moments to a sample of 33 Sub-Saharan African countries. The findings indicate that economic growth mitigates the exacerbating effect of urbanisation on income inequality. On the other hand, inflation and the labour force participation rate are sources of income inequality. Thus, urbanisation will only reduce income inequality in Africa if it stimulates economic growth. In terms of implication, the authorities must strengthen their strategies in favour of the sanitation of urban areas. Smart city strategies can also be adopted to make cities more inclusive.