Human Capital Development and Income Inequality in Sub Saharan Africa: The Post-Pandemic Era

Abstract

Covid 19 has given rise to a number of challenges that have affected global economic conditions and social behaviour. There have been disruptions to education and healthcare services, as well as the disproportionate impact on vulnerable populations. This study explores the intricate relationship between human capital development and income inequality in sub-Saharan Africa (SSA), a region characterized by persistent human capital deficits and significant income disparities. Utilizing panel data from 31 SSA countries spanning 1996 to 2021, the study employs System Generalized Method of Moments (GMM) and Panel Corrected Standard Errors (PCSE) to investigate how human capital, represented by the Human Capital Index (HCI) and life expectancy, impacts income inequality, measured by the Gini coefficient. Our findings reveal a paradoxical positive relationship between human capital development and income inequality, suggesting that improvements in education and health do not uniformly benefit all segments of society, thereby exacerbating disparities. In contrast, factors such as access to electricity and gross fixed capital formation demonstrate an adverse effect on income inequality, showcasing their potential to foster equitable socio-economic growth. The results emphasize the importance of comprehensive policy frameworks aimed at inclusive education and healthcare access, responsive governance, and targeted economic investments, particularly in labour-intensive sectors. Our research contributes to the understanding of human capital dynamics in SSA and offers crucial insights for policymakers striving to address the complex challenge of income inequality in the region.

Keywords: Human Capital, Human Capital Development; Income Inequality, Sub Saharan Africa

DOI: 10.7176/DCS/15-2-01

Publication date: May 30^th 2025