Real income and income distribution in Ghana (1991-1999)
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Date
2001-12-12
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Abstract
The essence of this study has been to find out the trends in real income in Ghana during the 1990s. But trends in real national income are often assessed using aggregate indicators such as GDP per capita, or mean household income, whereas distribution literature centres on trends in inequality. By contrast, this study takes an integrated approach to real national income measurement. It uses methods that incorporates size and distributional considerations and applied them to household micro data in order to measure changes in real national income in Ghana during the last decade.
A class of decomposable real income indices is used which compliments the quasi- ordering method, generalised dominance criterion. The indices are also additively decomposable by socio-economic subgroups, a property, which helps us to know whose income fell, and whose income rose.
Prior to the estimation of real income indices, the extent of unequal distribution of income in Ghana was explored. All the measures of inequality used: - that is the positive measure (the Lorenz curve quantified by the Gini index) and the normative measure (Atkinson index) has shown that inequality in Ghana has deteriorated between 1991/92 and 1998/99. This confirms the belief of most participants in the Ghanaian income distribution debate: increasing inequality of income during the 1990s.
The empirical application suggests that, according to the generalised Lorenz curves and all the real income indices, real national income decreased between 1991/92 and 1998/99. Moreover, non-farm self-employment sub-group was the worse-off whereas families belonging to the household agricultural income were those who suffered the least decline in real income during the period. Estimates of the index incorporating a relatively high degree of inequality aversion suggest that real national income remain the same during 1 990s for agricultural income (contrasting with wage income and non-farm self-employment). For non-farm self-employment income, the mean income saw an increase (as opposed to all the other income categories except “others” subgroup). All the other real income indices for non-farm self-employment however fell. Real income indices for the “Others” income group however increased.
Description
A thesis submitted to the School of Graduate Studies,
Kwame Nkrumah University of Science and Technology in partial
fulfilment of the requirements for the award of Master of Arts in Economics, 2001