Sources of Income Inequality: Empirical Evidence from Cameroon 1

The purpose of this paper is to carry out an empirical analysis of the sources of income inequality in Cameroon. The methods of quantile regression and total income inequality decomposition into population sub-groups are used to analyze the data of the third Cameroonian household survey (ECAM3). The results derived from decomposition analysis show that there exist considerable differences in the average consumption expenditure of households and in within-groups inequality. However, in spite of these differences, in all the groups considered, between-groups inequality only explains a small proportion of total inequality. Quantile regression analysis reveals the net positive effects of human resources and of social and physical capital on the level of consumption expenditure per adult equivalent at all the points of the expenditure distribution. The study also reveals a number of demographic effects in the urban and rural areas among which the most significant is caused by household size which contributes to the reduction of the household consumption expenditure across all the quantiles of the expenditure distribution. Moreover, regions where households reside also affect household consumption expenditure. Those who work in the services and trade sectors of the economy are better well-off than those who work in the other sectors of the economy.