THE IMPACT OF INCOME DISTRIBUTION ANALYSIS IN NIGERIA

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THE IMPACT OF INCOME DISTRIBUTION ANALYSIS IN NIGERIA

 

 

 

ABSTRACT

 

Reducing poverty and inequality in the developing world continues to be a major public policy challenge, and one that is complicated by the lack of a generalized comprehensive strategy for dealing with it. Putting the combat against poverty to the forefront as the main objective of the development process has raised the issue of the linkage between inequality and poverty. There is now a growing agreement that booth the rate and the distributional impact of income are important in fighting poverty. This paper analyzes the trend in income distribution in Nigeria and examines the issue of inequality in expenditure among households as well as urban-rural difference in consumption among households and further examines geopolitical zone inequality in Nigeria. That is, the decomposition analysis was divided into two categories. The first category is concerned with the decomposition of households‘ expenditure. This underscores the contributions of these components to overall inequality and may help in the design of effective economic and social policies to reduce inequality and poverty in Nigeria. The second category of decomposition analysis dealt with the breakdown of expenditure into population sub-groups (This approach starts with the division of a sample into discrete categories; for instance, rural and urban residents, gender, age group, education level of household heads, household size, occupation, states and geopolitical zones), and then follows with the estimation of the level of inequality using Gini coefficient while the Lorenz curve is used to measure changes in the income distribution. The analysis builds on a survey of 19158 households in Nigeria, which was conducted by the Nigeria living Standard Survey (NLSS) 2004 of the National Bureau of Statistics.

The results of our analysis indicate that factors such as age, gender, and education level of the household head are important factors in explaining inequality profile in the country. We however found that inequality exists in the rural and urban areas but more of the rural areas

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