Work

Income Inequality and Growth: Calibration and Simulation for the Kenyan Economy

Year: 2024

Type: article

Abstract: We investigate the notable decline in wealth and income inequality in the Kenya over the 10 year period between 2005 to 2015. Using a calibrated continuous time heterogeneous agent model, we attribute up to 80% of the variation in top wealth and income inequality to a persistent but slow increase in the return to capital, a low risk free rate, and rising ‘effective’ income tax rates. Our study suggests that a macroeconomic environment characterised by low risk-free interest rates anchored by low debt-to-fiscal revenue ratios are key to reducing both wealth and income inequality.

Source: Journal of African Economies

DOI: 10.1093/jae/ejae017

Author: Gilbert Mbara

Institution: University of Warsaw

Language: English

Topic: Income, Poverty, and Inequality

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: Reduced inequalities, No poverty

Open Access status: hybrid

Estimated APC paid: $4,770