AN EMPIRICAL ANALYSIS OF VERTICAL AND HORIZONTAL INCOME AND NON-INCOME INEQUALITY IN NIGERIA: A CASE STUDY OF KADUNA STATE
AN EMPIRICAL ANALYSIS OF VERTICAL AND HORIZONTAL INCOME AND NON-INCOME INEQUALITY IN NIGERIA: A CASE STUDY OF KADUNA STATE
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Date
2011-04
Authors
ISAH, Salamatu Idris
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Abstract
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LIST OF FIGURES / CHARTS
Figure 1 : Trend of Poverty by Sectors in Nigeria ------------------- 12
Figure 2 : Relative Poverty Trend by Location and zone -------------------- 17
Figure 3 : Poverty Index – Growth rate -------------------- 18
Figure 4 :Poverty – Gini Index -------------------- 18
Figure 5: Inequality Trend by Location and Zones -------------------- 19
Figure 6 : Real GDP Growth rate from 2002-2008 --------------------- 43
Figure 7 : Kaduna State per Capita Income --------------------- 44
Figure 8 : The Poverty, Inequality and Growth Relationship --------------------- 47
Figure 9 : Theoretical Approaches --------------------- 53
Figure 10 : The Poverty- Growth- Inequality Triangle --------------------- 62
Figure11: Decomposition of Changes in distribution
andPovertywithGrowthandDistributionalEffect --------------------- 64
Figure12:The theoretical framework and the main points
of Divides in Nigeria and Kaduna State ---------------------- 107
Figure 13 : Map of Kaduna State Showing Case Study
Area ( Locations) ---------------------- 114
Figure 14 : Educational and Literacy Levels of the
Respondents --------------------- 122
Figure 15 : Distribution of Respondents by Other
Sources ( Asset) income ---------------------- 132
Figure 16 : Monthly Food Expenditure by Five Quintile
Groups of Households in Kaduna State ----------------------- 156
Figure 17 : Annual Food Expenditure by Five Quintile
Groups of Households in Kaduna State ------------------------ 157
Figure 18 : Monthly Health Expenditure by Five Quintile
Groups of Households in Kaduna State ------------------------ 158
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ABSTRACT
The literature on poverty has evolved to the point where poverty and inequality are believed to
have vertical and horizontal dimensions. Yet, most of the survey studies and researches on
poverty and inequality in Nigeria lack sufficient and adequate analysis of horizontal inequality.
This identified knowledge gap has weakened the effectiveness of both micro and macro level
policy intervention on poverty and inequality in Nigeria. This is because the chances of a
successful reduction of poverty and inequalities among individuals and group of individuals can
be limited by the existence of inequalities in the identified dimensions. This dissertation provides
useful information on the nature, pattern and extent of horizontal inequality in Kaduna state to
support the thesis that horizontal inequality is a major constraint to the effectiveness of antipoverty
and anti-inequality policy measures. The collected data was on three major sources of
households income (wages/salaries, assets and total income), using cluster survey methods to
include in the sample a demographically diverse set of households in terms of gender, income
groups, ethnicity and religion. The data was collected in three local Government areas (Kaduna
North, Kaduna South and Giwa) in Kaduna state of Nigeria. The study made used of relative
poverty line threshold, Gini coefficient, Theil Index, Coefficient of Variation and Quintile as
tools of analysis. The results from the various analyses provided empirical evidence of the
nature, pattern and extent of both the general level of inequality (vertical) and between groups(
horizontal) inequalities in Kaduna State. The dissertation revealed that (i) the major source of
income among the respondents was earnings (wages and salaries); (ii) the income gap between
the rich and the poor in all the three income sources was wide in each location and (iii) the nature
of the degree in asset inequality was 86%, 75% and 74% in Kaduna North, Kaduna South and
Giwa, respectively. In terms of degrees of earnings inequalities, it was 94%, 57%, and 45% in
Kaduna South, Kaduna North and Giwa, respectively. The percentages of the poor in vertical
analysis averaged 40% in total income source and Earnings but with 17.5% in Asset.
Horizontally, in Kaduna North, the percentage of the poor ranged between 20% (assets) and 76%
(wages/salaries). The Gini Indices also show very high unequal distribution across gender,
religion, location and ethnic groups as well as in access to basic infrastructure like health and
education. Based on the above findings, the study concluded that the level of vertical and
horizontal inequalities in Kaduna state is significant and the causes are multi- dimensional in
nature. The major determinants are earnings, assets, total income and job status. The findings of
this study implies that anti-inequality policies in Kaduna State will not be effective if they do not
account for both the vertical and horizontal dimensions of poverty. Therefore, government policy
must be designed to target the least disadvantaged groups in each location focusing on the unique
nature and extent of horizontal inequalities in each location. Such a targeted response guided by
the information on the nature, pattern and extent of horizontal and vertical inequalities in each
location will more likely to be effective in raising the poverty reduction elasticities of growth
and, of government intervention.
Description
A DISSERTATION PRESENTED TO THE
DEPARTMENT OF ECONOMICS, AHMADU BELLO
UNIVERSITY, ZARIA AS PART OF THE REQUIREMENTS
FOR THE AWARD OF DOCTOR OF PHILOSOPHY(Ph.D)
DEGREE IN ECONOMICS.
Keywords
EMPIRICAL ANALYSIS OF VERTICAL AND HORIZONTAL INCOME,, NON-INCOME INEQUALITY,, NIGERIA,, CASE STUDY,, INEQUALITY,, NIGERIA,, KADUNA STATE