Macroeconomic adjustment, socio-demographic change, and the evolution of income distribution in Côte d’Ivoire — A decomposition by microsimulation

This paper proposes a microeconomic decomposition of the evolution of income inequality in Côte d’Ivoire in the 1990s, allowing to disentangle the simultaneous contributions of four types of phenomena to the evolution of the distribution of income: a change in the remuneration rates of the observed and unobserved earnings determinants, a change in the occupational preferences, and a change in the socio-demographic population structure. I show, for instance, that the increase of income inequality in Abidjan was the result of changes in the socio-demographic population structure and of changes in unobserved earnings determinants, even though higher activity, inflows in wage labour, a drop in the returns to schooling, and the Ivorian/Non-Ivorian wage differential worked toward a more equal distribution. Concerning the growth and inequality link it is interesting to find that both, the negative income growth in Abidjan as well as the positive income growth in rural Côte d’Ivoire, were connected with rising inequality. JEL classification: C15, D31, J22, J31, O12.