Functional distribution of income in Africa: An estimation of the shares of owners of capital and labour in GDP

Abstract

The functional distribution of income in Africa is a critical aspect of economic analysis that focuses on how income is distributed among  various factors of production. However, understanding the dynamics of functional income distribution is essential for comprehending the  economic landscape and the factors that influence income disparities within African economies. The study estimates the share of  owners of capital and labour in GDP in Africa. To achieve this objective, the growth accounting equation provides the core framework for  the models adopted in the study. Two sets of equations were specified, which are aggregate and per capita with four variants of  estimates, two each for the equations. Intercepts were suppressed in two of the four variants of the estimates while the intercept was  included in the remaining two variants of the estimates. The study employed regression to analyse the data, which were over 1996-2022  years, and were mainly sourced from the World Development Indicator of the World Bank database. Following the above methodology,  the highlights of findings confirmed the evidence that the share of GDP accruing to the capitalists exceeds that accruing to workers.  Specifically, based on these estimates that are relatively valid on theoretical grounds, the capitalists have a share in GDP of between 56%  and about 70%, depending on the growth accounting variant employed in the estimation, so that only the remaining share that is  between 44% and 30% of GDP accrues to workers.