Unmasking the factors behind income inequalities in Ghana

The purpose of the paper is to examine the extent and trends of income inequality as well as the contribution of household and community-level factors in explaining inequality within north and south in Ghana.

The study employs both descriptive and regression methods. The study adopts the methodology by Fields (2002) to assess the importance of household and community attributes in explaining the level of inequality within the north and the south.

The findings of the study show that household characteristics such as urban location, no education, public and private formal economic activities, and not covered by National Health Insurance Scheme are major determinants of inequality within the north and the south. Specifically, within the north, the 20-34 year age group is the most prominent contributor to inequality. Within the south, the most important determinant of inequality is the completion of junior high school. The contribution of community-level features shows that, within the north, access to banks is the most vital factor to inequality, whereas within the south, access to electricity and public transport is the most important community factor.

The study provides an understanding of the underlying household and community factors driving the observed inequality patterns within the north and the south in Ghana. Policy options are identified for achieving the sustainable development goals.

The study uses the latest round of the Ghana Living Standards survey, GLSS 6, which covers new data on a nationally representative sample of 18,000 households in 1,200 enumeration areas.