The consumption, income, and wealth of the poorest: An empirical analysis of economic inequality in rural and urban Sub-Saharan Africa for macroeconomists

We provide new empirical insights on the joint distribution of consumption, income, and wealth using cross-sectional and panel household-survey data from three of the poorest countries in the world—Malawi, Tanzania, and Uganda—all located in Sub-Saharan Africa (SSA). Our main contribution is to establish the co-existence of two phenomena in SSA: (i) a low transmission from income inequality to wealth inequality (i.e., low accumulation); and (ii) a low transmission from income inequality to consumption inequality (i.e., high consumption insurance). The variation between rural and urban areas in SSA—and between SSA and the United States of America—reveals a negative relationship, and potentially, a trade-off between accumulation and consumption insurance.