Educational Expansion Regimes and Wealth Inequality in Sub‐Saharan Africa

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Abstract Between 1990 and 2019, primary school enrollment in Sub‐Saharan Africa (SSA) surged from 62 million to 187 million students. Despite this growth, SSA remains one of the most unequal continents, challenging the notion that educational expansion reduces wealth inequality. This paper investigates the correlation between educational expansion and household wealth inequality in SSA by conceptualizing educational expansion as distinct regimes with varying educational compositions and rates of expansion, rather than a sequential increase in the proportion of educated populations. Utilizing Demographic and Health Surveys from 15 SSA countries, this paper decomposes changes in household wealth inequality across four expansion regimes spanning the 1990s and 2010s. Contrary to predictions that educational expansion and wealth inequality would follow an inverted U‐shaped curve as proposed by the Kuznets hypothesis, evidence reveals considerable cross‐country variation. Decomposition analysis demonstrates that the level of inequality varies by the overall educational composition and the relative pace of expansion between primary and secondary education. These findings highlight the importance of categorizing educational expansion as distinct regimes by revealing how seemingly similar educational expansions have vastly different associations with wealth inequality.

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Macroprudential Policy and Household Wealth Inequality
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Macroprudential policies, such as caps on loan-to-value (LTV) ratios, have become part of the policy paradigm in emerging markets and advanced countries alike. Given that housing is the most important asset in household portfolios, relaxing or tightening access to mortgages may affect the distribution of household wealth in the country. In a stylised model we show that the final level of wealth inequality depends on the size of the LTV ratio, housing prices, credit cost and the strength of a bequest motive; ultimately with no unequivocal effect of LTV ratios on wealth inequality. These trade-offs are illustrated with estimations of Gini Recentered Influence Function regressions on household survey data from 12 Eurozone countries that participated in the first wave of the Household Finance and Consumption Survey (HFCS). The results show that, among the households with active mortgages, high LTV ratios at the time of acquisition are related to high contributions to wealth inequality today, while house price increases are negatively related to inequality contributions. A proxy for the strength of bequest motives tends to be negatively related with wealth inequality, but credit cost does not show a significant link to the distribution of wealth.

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