Abstract
This paper aims to examine the relationship between employment and income inequality in Sub-Saharan African countries. Even though the region has experienced a decade of positive economic growth, it has the second highest level of income inequality in the world. The drivers of income inequality are quantitatively investigated using data from 1991 to 2015 by the Fully Modified Ordinary Least Squares technique. The results show that employment, trade and domestic investment reduce income inequality in the region in the long term. Higher trade tends to improve income equality in middle-income countries. Alternatively, domestic investment and trade have more potential to reduce inequality in low-income economies. Controlling corruption is essential in the long run for job creation, irrespective of the development stage of the country. There is thus evidence to show that policies must be oriented to more opportunities of employment, domestic investment, trade and good governance in terms of low corruption.
Which Form of Foreign Capital Inflows Enhance Economic Growth? Empirical Evidence in Sub-Saharan Africa