Abstract
Income inequality and poverty in Nigeria are closely related. This chapter analyzes the contributions of income sources and socio-economic factors to income inequality, and estimates the contributions of income redistribution and growth to poverty reduction. Household survey data obtained from the National Bureau of Statistics (NBS) are used. Results show that in 2004, income inequality was higher in rural than in urban areas. Wage and non-farm income made the largest contributions to urban income inequality, while agricultural and wage incomes contributed most to rural inequality. Household size, urbanization, and education significantly increased income inequality, while age, paid/salaried jobs, and non-farm enterprises decreased it (p<0.05). Between 1998 and 2004, income redistribution reduced poverty but income growth increased it. The authors therefore recommend that welfare enhancing programs that benefit the poor should be identified and that better economic opportunities should be created for those in rural areas.
Published Version
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