Climate change and income inequality in Sub-Saharan Africa (SSA): effects and transmission channels

Abstract

Purpose The purpose of this paper is to assess the direct effect of climate change on income inequality in Sub-Saharan Africa (SSA) and the channels through which it spreads. Design/methodology/approach Using a sample of 38 countries, the authors specify and estimate a panel data model using the generalized least squares method over the period 1991–2020. Robustness is achieved through the generalized moment method-system. Findings The results show that an increase in vulnerability to climate change is positively and significantly associated with an increase in income inequality. The results also show that the effects of climate change are mediated by gross domestic product/capita, population and agriculture at the 15%, 17% and 24% thresholds, respectively. Research limitations/implications The authors suggest the implementation of inclusive development policies consistent with climate mitigation and adaptation objectives; the creation of financial spaces from various sources to finance the social security of the most vulnerable; and the strengthening of agricultural resilience to climate-related adverse events, including financing for greenhouse agriculture. Originality/value On the positive side, it contributes to the literature on the analysis of the direct and indirect effects (transmission channels) of climate change on income inequality in SSA. Methodologically, the study goes beyond previous work as it adopts a stepwise methodology, dealing with the endogeneity issue. At the logical level, it offers some non-exhaustive suggestions of potentially interesting economic policies to guide policymakers in their common commitment to “reduce income inequality” (Sustainable Development Goal 10, target 10.1).