Determinants of Income Inequality in Kobo Town

Abstract

Income inequality is when individuals living in a given country earn disproportionate income levels. This accounts for the presence of high poverty, especially for households with lower incomes. Identifying the factors determining the existence of inequality is essential to reduce income inequality. With this objective, this study analyzes the determinants of income inequality in kobo town. To explore the determinants of income inequality, primary data obtained from the sample households for the city is applied. The inequality situation in this town is analyzed using income distributions, proving that income inequality in the city is high, and the Gini index of income is 0.38. then, marginal effects from the ordered logit model proved that households with houses have a higher probability of being in a high-income group than those who have lived in a rented house to be in a high-income stream. The effects of continuous variable reported as high education level is associated with a high probability of being a higher income earner.

Keywords: Egalaterian Line, Gini Index, Income Inequality, Lorenz Curve, Ordered Logit, Kobo Town

DOI: 10.7176/DCS/13-1-01

Publication date: January 31^st 2023