The joint effect of corruption and unemployment on income inequality in sub-Saharan Africa

Abstract

This paper examines the role of unemployment in the relationship between corruption and income inequality in Sub-Saharan Africa (SSA), contributing directly to Sustainable Development Goal 10, which aims to reduce inequality within and among countries. In the literature, existing studies have been separated, examining the link between corruption and income inequality on the one hand and unemployment and income inequality on the other. However, studies concerning the effect of the synergy of unemployment and corruption on income inequality are quite rare. To fill this gap, this study examines this effect in 44 sub-Saharan African economies over the period 2007–2022. To achieve this objective, the fractional regression method (FRM) and the two-step generalised method of moments (two-step system GMM) were adopted. The results show that corruption has a significant and positive impact on income inequality. Similarly, the results suggest that unemployment is significantly associated with higher levels of income inequality. More importantly, the results indicate that the interaction between corruption and unemployment amplifies the negative and significant effect on income inequality. These findings highlight the critical need for integrated policy interventions aimed at simultaneously combating corruption (SDG 16) and unemployment (SDG 8), thus advancing sustainable development efforts in the region. Policy implications are discussed on the basis of the results revealed by this study. More specifically, this study highlights the importance of jointly fighting corruption and unemployment in sub-Saharan African countries in order to significantly reduce income inequality.