Abstract
This paper evaluates the impact of human capital endowments on measured inequality in Cameroon. We first estimate determinants of household economic well‐being (HEW) in which human capital endowments are considered as endogenous effort‐related regressors, while controlling for exogenous circumstance‐related variables. Second, we simulate alternative counterfactual distributions of HEW: one in which human capital endowments are equalized; and the other in which variations are entirely attributable to the unobservable terms. Finally we compare inequality in the factual distribution of household well‐being with inequality in each of the simulated distributions. Direct and indirect exogenous opportunity‐inducing circumstances are inequality‐augmenting, whereas human capital endowments are inequality‐reducing in the actual distribution. Education and health interventions will ameliorate well‐being and mitigate inequality. Thus, leveling the playing ground for individuals to have equitable exposure to education, health and labor market participation is required for a low‐income country like Cameroon to enhance equity and sustainable household economic growth.
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