Measuring the Income Inequality in Nigeria: the Lorenz Curve and Gini Co-efficient Approach

Abstract

In recent years, especially since the mid 1990s, there have been debates and commentaries exploring the concept, types, sizes and economic implications of income inequalities. This study carried out a quantitative measure of the size and the core determinant of income inequality in Nigeria. The study used standard traditional measurement approach: the Lorenz Curve and Gini Co-efficient to determine the size of income inequality and ordinary least square simple regression method to analyze the basic determinant of income inequality in Nigeria. The Gini co-efficient of Nigeria lies between 46 and 60 percent. From the result obtained, we discovered that there is a disturbing income inequality in Nigeria. The regression result shows that 1 percent increase in the literacy rate increase the Gini coefficient by 3 percent meaning that there is higher disparity in the income distribution in Nigeria with increase in literacy rate. The findings of the study support the need for the government to formulate policies targeting at improving the welfare of the poor and those that provide employment and improve the lot of low-paid workers.