Urban Agglomeration and Income Inequality: Is Kuznets Hypothesis Valid for Sub-Saharan Africa?

Abstract

This paper contributes to the ongoing debate on the relationship between urban agglomeration and income inequality. The World Bank and the United Nations place Sub-Saharan Africa among the leading urbanizing regions with sizable urban agglomeration inequality challenges. Therefore, the main research question of this study was whether there is a significant relationship between urban agglomeration and income inequality. This study also aimed to determine whether the relationship is nonlinear, estimated using a dynamic panel model, an inverted U-shaped Kuznets hypothesis, and balanced panel data from 2000 to 2020 for 22 countries in Sub-Saharan Africa. The findings revealed a nonlinear relationship between urban agglomeration and income inequality in Sub-Saharan Africa. The findings showed that income inequality increases with urban agglomeration in the first stage and decreases in the later stages of urbanization. Based on the findings, our recommendations are to enhance governance capacity in providing urban infrastructural investment, improve industrialization capacity, and open up the peri-urban connecting rural regions through public–private development partnerships to shorten the urbanization-driven income inequality inverted U-shaped Kuznets’ turning point in Sub-Saharan Africa.