Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/227983 
Year of Publication: 
2020
Series/Report no.: 
AGDI Working Paper No. WP/20/005
Publisher: 
African Governance and Development Institute (AGDI), Yaoundé
Abstract: 
In this study, we examine how insurance affects income inequality in sub-Saharan Africa, using data from 42 countries during the period 2004-2014. Three inequality variables are used, namely: the Gini coefficient, the Atkinson index and the Palma ratio. Two insurance premiums are employed, namely: life insurance and non-life insurance. The empirical evidence is based on the Generalized Method of Moments (GMM). Life insurance increases the Gini coefficient and increasing life insurance has a net positive effect on the Gini coefficient and the Atkinson index. Non-life insurance reduces the Gini coefficient and increasing non-life insurance has a net positive effect on the Palma ratio. The analysis is extended to establish policy thresholds at which increasing insurance premiums completely dampen the net positive effects. From the extended analysis, 7.500 of life insurance premiums (% of GDP) is the critical mass required for life insurance to negatively affect inequality, while 0.855 of non-life insurance premiums (% of GDP) is the threshold required for non-life insurance to negatively affect inequality. Policy thresholds are provided at which insurance penetration decreases income inequality in sub-Saharan Africa.
Subjects: 
Insurance
Inclusive development
Africa
Sustainable Development
JEL: 
I28
I30
I32
O40
O55
Document Type: 
Working Paper

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