Disaggregation Of Sources Of Income Inequality In Sudan

Abstract

This paper examines income inequality in Sudan, using data of the national labor surveys carried out by Ministry of Labour, in 1996 and 2011. It attempts to explore the contribution of different income sources to over-all income inequality, by disaggregating the Gini measure of household per capita income, and change in the sources relative marginal effects between the two years. A Gini coefficient of 71% is indicated in 1996 with a lower value of 61% shown for 2011. Wages and paid labor income are found to represent the largest share of household per capita income and ranked first among the different income sources in contribution to overall inequality (63.5% in 1996 and 43% in 2011). Income from agricultural and livestock represented the second largest share (36%) in income composition in 2011 and in relative contribution to inequality (39%) compared to a lower contribution of (around 9%) in 1996, when one fifth of total per capita income was made of remittances and transfers. In 1996 both income and remittances seemed to have benefited the top income recipients. It is argued that this can be attributed to the harsh economic measures implemented in mid-1990, which privatized the provision of vital services to agriculture, including provision of credit. An increase in contribution of non-agricultural income in 2011 seemed to produce favorable impact on inequality as indicated by a marginal effect of -.003. Also in 2011, though contributing less to income than in 1996, remittances and transfers had an equalizing effect on overall inequality (marginal effect of -0.02). It is suggested that improvement in agricultural infrastructure, and provision of inputs like water and credit facilities, especially to small producers, and creation of off-farm activities in rain-fed areas, and support to self-employed and small producers in services and trade in urban areas, would have a favourable impact on employment and income distribution.