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AN EMPIRICAL ANALYSIS OF VERTICAL AND HORIZONTAL INCOME AND NON-INCOME INEQUALITY IN NIGERIA: A CASE STUDY OF KADUNA STATE
ABSTRACT
The literature on poverty has evolved to the point where poverty and inequality are believed to have vertical and horizontal dimensions. Yet, most of the survey studies and researches on poverty and inequality in Nigeria lack sufficient and adequate analysis of horizontal inequality. This identified knowledge gap has weakened the effectiveness of both micro and macro level policy intervention on poverty and inequality in Nigeria. This is because the chances of a successful reduction of poverty and inequalities among individuals and group of individuals can be limited by the existence of inequalities in the identified dimensions. This dissertation provides useful information on the nature, pattern and extent of horizontal inequality in Kaduna state to support the thesis that horizontal inequality is a major constraint to the effectiveness of antipoverty and anti-inequality policy measures. The collected data was on three major sources of households income (wages/salaries, assets and total income), using cluster survey methods to include in the sample a demographically diverse set of households in terms of gender, income groups, ethnicity and religion. The data was collected in three local Government areas (Kaduna North, Kaduna South and Giwa) in Kaduna state of Nigeria. The study made used of relative poverty line threshold, Gini coefficient, Theil Index, Coefficient of Variation and Quintile as tools of analysis. The results from the various analyses provided empirical evidence of the nature, pattern and extent of both the general level of inequality (vertical) and between groups( horizontal) inequalities in Kaduna State. The dissertation revealed that (i) the major source of income among the respondents was earnings (wages and salaries); (ii) the income gap between the rich and the poor in all the three income sources was wide in each location and (iii) the nature of the degree in asset inequality was 86%, 75% and 74% in Kaduna North, Kaduna South and Giwa, respectively. In terms of degrees of earnings inequalities, it was 94%, 57%, and 45% in Kaduna South, Kaduna North and Giwa, respectively. The percentages of the poor in vertical analysis averaged 40% in total income source and Earnings but with 17.5% in Asset. Horizontally, in Kaduna North, the percentage of the poor ranged between 20% (assets) and 76% (wages/salaries). The Gini Indices also show very high unequal distribution across gender, religion, location and ethnic groups as well as in access to basic infrastructure like health and education. Based on the above findings, the study concluded that the level of vertical and horizontal inequalities in Kaduna state is significant and the causes are multi- dimensional in nature. The major determinants are earnings, assets, total income and job status. The findings of this study implies that anti-inequality policies in Kaduna State will not be effective if they do not account for both the vertical and horizontal dimensions of poverty. Therefore, government policy must be designed to target the least disadvantaged groups in each location focusing on the unique nature and extent of horizontal inequalities in each location. Such a targeted response guided by the information on the nature, pattern and extent of horizontal and vertical inequalities in each location will more likely to be effective in raising the poverty reduction elasticities of growth and, of government intervention.
AN EMPIRICAL ANALYSIS OF VERTICAL AND HORIZONTAL INCOME AND NON-INCOME INEQUALITY IN NIGERIA: A CASE STUDY OF KADUNA STATE
