Income inequality in SSA and its sub-regions: The role of government education spending and institutional quality

TEWA PAPY VOTO; Nicholas Ngepah; TEWA PAPY VOTO; Nicholas Ngepah

doi:10.3934/NAR.2026020

National Accounting Review

2026, Volume 8, Issue 3: 488-512. doi: 10.3934/NAR.2026020

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Research article

Income inequality in SSA and its sub-regions: The role of government education spending and institutional quality

TEWA PAPY VOTO ^,,
Nicholas Ngepah

School of Economics, University of Johannesburg, Johannesburg, South Africa

Received: 10 August 2026 Revised: 28 August 2026 Accepted: 14 September 2026 Published: 30 September 2026
JEL Codes: D63, H52

The persistently elevated levels of income inequality in Sub-Saharan Africa (SSA) remain a significant obstacle to achieving Sustainable Development Goal 10 (SDG 10), which seeks to reduce inequalities within and across countries. In this study, we investigated the impact of public expenditure on education and institutional quality on income inequality in SSA using the Dynamic Common Correlated Effects Instrumental Variable (DCCE-IV) estimator. Institutional quality was measured through a composite index constructed from six governance indicators using Principal Component Analysis (PCA). The empirical analysis was based on a panel of 40 SSA countries and their respective sub-regions, covering the period from 1980 to 2024. Outcomes demonstrated that institutions and education spending contribute to increased inequality, with variations across sub-regions. Institutions lead to higher inequality in West, East, and Southern-Africa. Additionally, education spending reduces inequality in Southern and West-Africa but worsens it in Central and Eastern Africa. The interaction between institutions and education spending exacerbates inequality in Southern, Eastern, and West Africa. The study underscores the need for a redistributive framework in SSA to manage education spending effectively and establish strong institutions for the welfare of all citizens, particularly low-income earners.
- institution,
- income inequality,
- government education spending,
- DCCE-IV,
- SSA countries
Citation: TEWA PAPY VOTO, Nicholas Ngepah. Income inequality in SSA and its sub-regions: The role of government education spending and institutional quality[J]. National Accounting Review, 2026, 8(3): 488-512. doi: 10.3934/NAR.2026020

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Abstract

The persistently elevated levels of income inequality in Sub-Saharan Africa (SSA) remain a significant obstacle to achieving Sustainable Development Goal 10 (SDG 10), which seeks to reduce inequalities within and across countries. In this study, we investigated the impact of public expenditure on education and institutional quality on income inequality in SSA using the Dynamic Common Correlated Effects Instrumental Variable (DCCE-IV) estimator. Institutional quality was measured through a composite index constructed from six governance indicators using Principal Component Analysis (PCA). The empirical analysis was based on a panel of 40 SSA countries and their respective sub-regions, covering the period from 1980 to 2024. Outcomes demonstrated that institutions and education spending contribute to increased inequality, with variations across sub-regions. Institutions lead to higher inequality in West, East, and Southern-Africa. Additionally, education spending reduces inequality in Southern and West-Africa but worsens it in Central and Eastern Africa. The interaction between institutions and education spending exacerbates inequality in Southern, Eastern, and West Africa. The study underscores the need for a redistributive framework in SSA to manage education spending effectively and establish strong institutions for the welfare of all citizens, particularly low-income earners.

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