Academic journal article Current Politics and Economics of Africa

Education and Income Inequality in the Democratic Republic of Congo *

Academic journal article Current Politics and Economics of Africa

Education and Income Inequality in the Democratic Republic of Congo *

Article excerpt

(ProQuest: ... denotes formulae omitted.)

1. Introduction

Over the last decades, many economies-including those in the developing countries-have witnessed a significant expansion of the average level of education (Barro and Lee, 2010). While it is widely acknowledged that education plays an important role in reducing inequalities (Card, 1999; Hanushek, Schwerdt, Wiederhold, and Woessmann, 2015; Heckman, Humphries, Veramendi, and Urzua, 2014; Heckman and Mosso, 2014), there is a little compelling evidence that they play a positive role and even less about the mechanisms by which education affects inequality in developing countries. To date, most of the researches on education and income inequality have focused on cross-country analysis for developed countries. Hence, the evidence for the relationship concerning education and inequality is arguably absent in the literature for Sub-Saharan Africa, especially at country level. There is particularly limited empirical work because of data issues, among which, in particular, the lack of longitudinal dataset.

In this paper, I provide a detailed picture of the relationship between educational inequality and income inequality in the Democratic Republic of Congo (DRC) between 2005 and 2012, using a district-level panel data. Put differently, I construct a panel dataset by compiling two waves of the DRC household survey data at district level, measure inequality in income and education, and estimate an econometric model in which education expansion predicts income inequality.

Despite its endowment in natural resources, DRC remains one of the poorest countries in the world, as the impressive GDP growth performance in recent years has not contributed to significantly reduce the high levels of initial poverty that were inherited from long years of war and mismanagement. The growth rate has been maintained at an average of 6 percent for more than 10 years while the stock of inwards FDI increased 3 times compared to its 2000 level. However, poverty and employment outcome was relatively poor. The elasticity of growth to employment was 0.71 in 2000-2004 and 0.53 in 2004-2008. Poverty incidence fell from 71.3 percent to 63.4 percent between 2005 and 2012, with an annual rate of 1.66 percent. Subjective poverty figures show that almost half of the households perceive themselves as in worse economic conditions compared to the previous year. Subjective poverty, which is estimated at 73 percent, is very alarming as 55.62 percent of households believe that their living standards have decreased. 42.98 percent of households have seen their purchasing power decreased, 48.83 percent cannot feed themselves and 74.14 percent are unable to save. The weak translation of growth into poverty reduction and better living standard raises the level of urgency with which social policy should be envisaged, as the boom in the commodity cannot last longer.

The purpose of this paper is to analyse the evolution of inequality in DRC and estimate the extent to which educational inequality affects income inequality. Empirical studies on the relationship between income and inequality in DRC are predominantly about the pattern of growth and rely on simulation models (Otchia, 2014, 2015). For example, Otchia (2015) assessed the distributional effect of mining based growth in DRC using a CGEmicrosimulation model. The author found that the pattern of growth affects significantly the aggregate performance in terms of poverty reduction. This is because mining-based growth had anti-poor effects in urban areas and almost neutral effects in rural areas. The paper argued also that the initial income distribution had a clear influence on the way this growth has not translated to a proportional poverty reduction. In another study on the effect of agricultural modernization on poverty in DRC, Otchia (2014) found that poverty reduction due to growth led by large-scale investment in agriculture depends on the initial level of inequality in income or distribution of assets. …

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