Are African Households Heterogeneous Agents?: Stylized Facts on Patterns of Consumption, Employment, Income and Earnings for Macroeconomic Modelers
37 Pages Posted: 2 Jun 2015
Date Written: May 2015
This paper reviews the evidence on how households in Sub-Saharan Africa segment along consumption, income and earning dimensions relevant for quantitative macroeconomic policy models which incorporate heterogeneity. Key findings include the importance of home-grown food in the income and consumption of households well up the income distribution, the lack of formal financial inclusion for all but the richest households, and the importance of non-wage income. These stylized facts suggest that an externally-generated macroeconomic shock and the short-term policy response would mainly affect the behavior and welfare of these richer urban households, who are also more likely to have the means to cope. Middle class and poor households, especially in rural areas, should be insulated from these external shocks but vulnerable to a wide range of structural factors in the economy as well as idiosyncratic shocks.
Keywords: Income distribution, Sub-Saharan Africa, Income inequality, Household consumption, Employment, Business cycles, Econometric models, poor, poor households, savings, rural, poverty, rural areas, household income, household survey
JEL Classification: D31, E60, J01, O11, O23
Suggested Citation: Suggested Citation