Welfare Inequality in Nigeria

Abstract

Using National Living Standard Survey (NLSS) 2004 to analyse the distribution of income and expenditure to analyse welfare inequality measure Nigeria. We compare the income and expenditure indicators to ascertain which affects welfare mostly. We observed that income index affect individual welfare than expenditure. Although we identify the limitation of both measures, however, using Generalised Entropy Class of Inequality measures to determine welfare inequality. We found out that welfare inequality in Nigeria stems from differences among households with similar measured characteristics, rather than between groups. In regard to the decomposition by population characteristics, our inequality measures age-group of household heads, family composition and educational level of heads of household as important factors in explaining inequality sources. Using the regression-based decomposed methods, we decompose household sources of income inequality into contributions by individual deterministic factors plus the shares by the residual term. We found that, based on the GE (2) decomposition, among the deterministic factor, household farm income was by far the most significant single contributor to household income inequality in Nigeria.

DOI: 10.5901/mjss.2014.v5n7p579