THE SIZE DISTRIBUTION OF INCOME IN LIBERIA

Abstract

The economy of Liberia is one in which, in spite of past satisfactory growth performance, a high level of income inequality persists. In 1977, for instance, a mere 2 percent of the people accounted for some 33 percent of nation‐wide wage income. These people live disproportionately in Montserrado County in which the capital city is located. While each of the other counties are largely rural and poor, each has far lower intra‐county inequality than wealthy Montserrado.Intersectoral location of the income‐earner, average income levels and the extent of access to human capital formation opportunities are some characteristics of the economy that have been found to explain significant portions of intercounty variations in the levels of household income concentration. Income inequality is reduced with increases in the extent of agricultural activity as the share of the top income group falls and that of the bottom group rises. The reverse happens with growing urban‐area activity. Higher income concentration occurs with rising per capita incomes as the top group's income share rises and the bottom income group's share falls. While this appears to be an instance of the Kuznet U‐shaped hypothesis, here there are no definite signs of a possible reversal any time soon. The levels of access to educational facilities move inversely with the level of inequality, with expanding elementary facilities benefiting the poorer people at the expense of the wealthy while the reverse happens in the case of expanding secondary educational facilities.