The Consumption, Income, and Wealth of the Poorest

This paper provides new empirical insights on the joint distribution of consumption, income, and wealth in three of the poorest countries in the world — Malawi, Tanzania, and Uganda — all located in Sub-Saharan Africa (SSA). The first finding is that while income inequality is similar to that of the United States (US), wealth inequality is barely one-third that of the US. Similarly, while the top of the income distribution (1 and 10 percent) earns a similar share of total income in SSA as in the US, the share of total wealth accumulated by the income-rich in SSA is one-fifth of its US counterpart. The main contributions of the paper are to document: (i) this dwarfed transmission from income to wealth, which suggests that SSA households face a larger inability to save and accumulate wealth compared with US households; and (ii) a lower transmission from income to consumption inequality, which suggests the presence of powerful institutions that favor consumption insurance to the detriment of saving. These features are more relevant for rural areas, which represent roughly four-fifths of the total population. The paper identifies the few successful pockets of the SSA population that are able to accumulate wealth by exploring sources of inequality such as age, education, migration, borrowing ability, and societal systems.

Bibliographic Details

Main Authors:	De Magalhaes, Leandro, Santaeulalia-Llopis, Raul
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-06
Subjects:	LIVING STANDARDS, PER CAPITA CONSUMPTION, FORECASTS, RISKS, HOUSEHOLD SIZE, HOUSEHOLD SURVEY, ECONOMIC GROWTH, PRODUCTION, VALUATION, DISPOSABLE INCOME, FOOD CONSUMPTION, INCOME, CONSUMPTION BEHAVIOR, AGRICULTURAL PRODUCTION, CONSUMPTION INSURANCE, INTEREST RATE, PROPERTY RIGHTS, COUNTERFACTUAL, POLITICAL ECONOMY, DEATH, PORTFOLIO, WELFARE, RURAL CREDIT, INCENTIVES, DISTRIBUTION, VARIABLES, INCOME GAP, INPUTS, PAYMENTS, WEALTH, RURAL POPULATION, CALORIC INTAKE, MEASURES, SAFETY NETS, DEVELOPMENT, LAND LAW, RURAL POPULATIONS, SAVINGS, RURAL HOUSEHOLD, COSTS, RURAL HOUSEHOLDS, DEVELOPMENT ECONOMICS, HOUSEHOLD HEAD, RURAL INCOME, RENT, FOOD PRICE, INEQUALITY MEASURES, INCOME INEQUALITY, EXCHANGE RATES, INDUSTRIALIZATION, TRANSFERS, DEBT, HOUSEHOLD COMPOSITION, HOUSEHOLD INCOME, HOUSEHOLD SURVEYS, LOTTERY, SOCIAL SECURITY, CALORIE INTAKE, FARMERS, RISK SHARING, LAND DISTRIBUTION, LAND VALUE, RURAL MIGRANTS, HOUSEHOLD HEADS, FOOD PRODUCTION, ECONOMIC RESEARCH, FOOD ITEMS, ALTERNATIVE USE, INCOME MEASURES, RURAL GAP, EQUILIBRIUM ANALYSIS, CONSUMPTION, AGRICULTURAL SHOCKS, SOCIAL SAFETY NETS, HUMAN CAPITAL, FOOD SECURITY, RURAL COUNTERPARTS, CAPITAL, WAGES, RURAL MIGRATION, VALUE, LAND QUALITY, RURAL AREA, CREDIT, MACROECONOMICS, FARM ACTIVITIES, POOR COUNTRIES, CONSUMER PRICE INDEXES, INCOME DISTRIBUTION, RURAL SETTINGS, AGRICULTURE, AGRICULTURAL LAND, GROWTH MODELS, RURAL, MEASUREMENT, SHARES, FARM WORK, ASSETS, PUBLIC WORKS, FOOD TRANSFERS, BENCHMARK, IDIOSYNCRATIC SHOCKS, AGRICULTURAL INPUTS, ECONOMIC INEQUALITY, INSURANCE, RURAL RESIDENTS, TRADE, CONSUMPTION SMOOTHING, THEORY, FOOD SHARE, GENERAL EQUILIBRIUM ANALYSIS, GROWTH RATE, RURAL AREAS, POVERTY, CREDIT MARKET CONSTRAINTS, HOUSEHOLD CONSUMPTION, INFORMAL INSURANCE, HUMAN CAPITAL INVESTMENT, SUBSISTENCE ECONOMY, UNDERESTIMATES, POOR, INCOME QUINTILE, PRICE INDEXES, INHERITANCE, FOOD PRICES, OUTCOMES, CONSUMPTION INCREASES, MIDDLE INCOME COUNTRIES, PRICES, ECONOMIC STATISTICS, PRODUCTION COSTS, DEVELOPMENT POLICY, INCOME GROUPS, INEQUALITY, POOR HOUSEHOLDS,
Online Access:	http://documents.worldbank.org/curated/en/2015/06/24703810/consumption-income-wealth-poorest-cross-sectional-facts-rural-urban-sub-saharan-africa-macroeconomists https://hdl.handle.net/10986/22218
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