The Nexus between Poverty and Income Inequality in Nigeria (1975-2007)

Abstract

This study examined the magnitude of poverty and income inequality in Nigeria.  It revealed the nexus that existed between the two variables – poverty and income inequality.  Secondary data were sourced from the statistical digest of National Bureau of Statistics and Central Bank of Nigeria publication.  Unit root test was conducted on the time series data using Phillip-Peron unit root test table after which the Vector Auto Regressive (VAR) model of estimation was employed to assess the relationship between poverty and income inequality through the VAR impulse response analysis and its variance decomposition analysis.  It revealed that a positive relationship existed between poverty and income inequality, which is measured by gini coefficient, thus income inequality was linked to the growing dimension of poverty in our society. The study recommended the implementation of various poverty reduction schemes to help reduce the nations poverty level and bridge the income inequality gap.

Keyword: Economic growth, Income Inequalities, Poverty.