Abstract
This paper analyzes the determinants of income and the urban-rural income gap to highlight the urban-rural inequality problem in Cameroon. It concurrently uses the OLS regression, the conditional quantile regression as well as the Blinder-Oaxaca decomposition techniques to achieve this objective. The findings of OLS estimations show that human resources and social as well as physical capital play a major role in the improvement of welfare. Household size reduces the consumption expenditures both in rural and urban areas. The regions where the households reside also affect consumption expenditures. Household heads who work in the services sector and trade are better-off than those working in the other sectors of the economy. However, quantile regressions results show that households headed by the old people enjoy a higher level of welfare in the upper quintiles of the distribution of consumption. Household heads who work in the industrial sector have a negative relationship with consumption at the 10th quintile of the distribution of household expenditures in the urban area. In the rural area, household heads working in the services sector have a positive relationship with consumption only at the 50th and 90th percentiles of the distribution of expenditures, whereas those belonging to the 10th quintile have a negative relationship with consumption. In the rural area, the average time span spent to reach an asphalted road has a stronger positive impact on the consumption of households belonging to the 90th percentile of the distribution of expenditures. Being a member of an association has a significant positive effect only on the consumption of households belonging to the 10th quintile of the expenditures distribution. The study results derived with the help of the Oaxaca-Blinder decomposition method show that 59 percent of the welfare gap between urban and rural areas may be explained by differences in the characteristics, and most particularly in physical assets and education. The remaining 41 percent of the welfare gap is explained by discrimination.
Highlights
In developing countries, the link between urban and rural sectors is characterized by the economic dualism which manifests itself through the coexistence of a modern urban sector and a traditional rural sector
In terms of geographic sites and by comparison with households residing in Yaoundé, the study results show that regional variables have negative effects on household consumption in urban areas, except for the consumption of households belonging to the 90th percentile of the Extreme-North region
In rural areas and compared with households residing in Yaoundé, the results show that regional variables (South-West, South, West, and Littoral) have insignificant positive effects on consumption whatever quantile is considered, whereas the regional variables of the North-West, North, and Extreme-North rather have negative effects on household consumption
Summary
The link between urban and rural sectors is characterized by the economic dualism which manifests itself through the coexistence of a modern urban sector and a traditional rural sector. This dualism has facilitated the isolated resolution of problems that affects each area. In Sub-Saharan Africa, a region which is considered as among the most unequal in the world, the analysis of regional inequality has received little attention in the previous literature Given these factors, the study of the differences in urban and rural incomes is crucial to understanding regional development models [3]
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