Income inequality and its drivers in colonial Kenya, 1921-1960
Gustafscenen Session 5: Global inequality – levels and trends organized by Ellen Hillbom
Abstract
Economic development and inequality are pressing issues in the countries of sub-Saharan Africa, home to half of the top 20 most unequal countries in the world. An increasing number of studies are seeking the origins of modern-day inequalities in the colonial period. Moreover, two-sector models by Lewis and Kuznets have been used to explain historical inequality dynamics. These theories postulate that growing inequalities result from the unbalanced distribution of resources between sectors. Yet, these models have two important drawbacks. They neglect the institutional factors influencing inequality outcomes but also cannot account for the complexity and dynamism of societies. Kenya poses an interesting case study as it has been characterized as a dual economy in the pioneering research of income inequality by Bigsten (1987). The conventional understanding is that sectoral dualism together with substantial settler presence would lead to higher levels of inequality. Using primary data collected at the national archives in the United Kingdom and Kenya, this paper produces new estimates of long-run incomes for 28 social classes in Kenya and estimates the inequality between these classes. In doing so, the paper breaks down the different income groups in a more comprehensive manner, especially when it comes to the African smallholder sector. The current study, thus, refers to Bigsten’s work but adds new dimensions to the old analysis by decomposing the social classes to get further insights into racial groups, occupations, skills, and gender differences. The current paper sets out to investigate the levels and trends of income inequality in the colonial setting through the method of constructing social tables. It draws upon the sectoral and institutional theories to interpret these levels and trends of inequality and aims at disentangling which groups gained in relative terms over the period of investigation from 1921 to 1960. In this way, it addresses the two shortcomings of the two-sector models – by adding the institutional dimension and by breaking down the society in a detailed manner using the social tables method. It finds relatively low income inequality in 1921 expressed by a Gini coefficient of 0,34, which contradicts the traditional understanding of the highly polarized nature of settler colonies. The results, then, throw doubt over the dualistic structure of the colony, which had to implement coercive institutional measures in order to secure the supply of labour. The low initial levels of inequality can be explained by low levels of pre-colonial economic development, lack of pre-colonial societal inequality, and the dominance of the smallholder sector living close to subsistence. Towards the end of the colonial period, inequality, however, started increasing and the economy started showcasing signs of dualism although the most oppressive institutional measures were abandoned.
No PDF available.