EuroEconomica, Vol 37, No 3 (2018)

Abstract

This paper assesses the impacts on private sector poverty and inequality of small changes in the within inequalities of expenditure and income sources. Specifically it (1) investigates the headcount poverty impact of a small change in the inequality of expenditure components (Food, Health, Education and Housing Expenses) and income sources (human capital, employment vulnerability, financial capital and household demographics) in Cameroon; and  (2) it assesses the sensitivity of this impact across poverty aversion measures, poverty lines and employment sectors (farm/nonfarm and formal/informal). This paper employs the most recent Cameroon household consumption survey (ECAM III) which provides the necessary data for our analyses. We observed that the largest impact on poverty is registered with increasing food inequalities and the smallest with increasing health inequalities. Concerning regressed income sources, we found that the highest increase in poverty incidence is recorded by increasing inequalities in human capital. Our results also showed that if we only have a small proportion of private sector workers who are vulnerable in employment, poverty depth will reduce appreciably. Importantly, we observed that the marginal poverty impacts and elasticities of within-component inequalities are sensitive in magnitude to the choice of poverty aversion measures and poverty lines. The government of Cameroon should invest in a system of education that reduces the number of dropouts at primary and secondary levels; this should be probably a system of education that meets the demands of the labour market.  If policy provisions allow for only a small proportion of private sector workers to be vulnerable in employment, poverty depth will reduce considerably.