Empirical evidence suggests that regional disparities in income are often very wide, that these disparities do not necessarily disappear as economies grow and that these disparities are themselves a major driver of growth. We use a novel approach based on multilevel modelling to decompose the sources of inequality in household incomes in Burkina Faso. We show that differences in income across space are explained not only by the spatial concentration of households with favourable characteristics but to a large extent also by disparities in community endowments. Climatic differences across regions do matter, also, but to a much smaller extent. On the basis of the findings, it would be worth assessing the potential effects of policies which build and enhance infrastructure that connects communities complemented by interventions targeted to specific villages that particularly lag behind.

Decomposition, Multilevel modelling, Poverty, Spatial income inequality, Sub-Saharan Africa
Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions (jel C21), Measurement and Analysis of Poverty (jel I32), Microeconomic Analyses of Economic Development (jel O12), Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (jel R12)
dx.doi.org/10.1111/j.1467-985X.2010.00686.x, hdl.handle.net/1765/26694
Journal of the Royal Statistical Society. Series A: Statistics in Society
Includes Accepted Author Manuscript
Erasmus School of Economics

Gräb, J, & Grimm, M. (2011). Inequality in Burkina Faso-to what extent do household, community and regional factors matter?. Journal of the Royal Statistical Society. Series A: Statistics in Society, 174(3), 759–784. doi:10.1111/j.1467-985X.2010.00686.x