The effects of taxation on income inequality in sub-Saharan Africa

Arbeitspapier

This paper investigates the effects of taxation on income inequality in an unbalanced panel of 45 countries in sub-Saharan Africa over the period 1980-2018. We use instrumentalvariable two-stage least squares and instrumental-variable quantile regression estimates. We find that taxation widens income inequality. We also show that the increasing effects of taxation on income inequality are higher in the most unequal countries than in the least unequal countries. Furthermore, we highlight an inverse U-shaped relationship between indirect taxes and income inequality. Governments in sub-Saharan Africa should increase indirect taxes to at least 28.36 per cent of gross domestic product in order to reap the dividends in terms of reducing inequality.

Object Details

• Language: Englisch
• ISBN: 978-92-9267-262-1

References and Relationships

• Bibliographic citation: Series: WIDER Working Paper ; No. 2022/129

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models: Single Variables: Instrumental Variables (IV) Estimation ; Personal Income, Wealth, and Their Distributions ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
• Subject: income inequality ; taxation ; quantile regression ; sub-Saharan Africa

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Ouedraogo, Idrissa Mohamed ; Dianda, Issa ; Ouedraogo, Pegdwende Patrik ; Ouedraogo, Rodrigue Tiraogo ; Konfe, Bassirou
• Event: Veröffentlichung
• (who): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (where): Helsinki
• (when): 2022

Further information

• DOI: doi:10.35188/UNU-WIDER/2022/262-1
• Handle: http://hdl.handle.net/10419/273918
• Last update: 10.03.2025, 11:44 AM CET