Full Article

Income inequality has been a source of major concern in developing countries, especially in Nigeria where there is a significant gap in income disparity. It is on this basis that this study examined the role transfer payment in the reduction of income disparity in Nigeria. Secondary data was adopted for the study and the data were sourced from Central Bank of Nigeria's (CBN) Statistical Bulletin, World Development Indicators (WDI) and the Organisation for Economic Co-operation and Development (OECD) database. The study utilised the descriptive and inferential statistics as the estimation technique. Mean, standard deviation median was employed for the inferential statistics while the error correction model (ECM) was adopted for the inferential statistics. The result shows that literacy rate, inflation, terms of trade, expenditure on health, and policy on social inclusion have positive signs while GDP growth, population density, active population, trade openness, expenditure on education, gratuities, subventions, and policy on social protection have negative signs in the short run while literacy rate, population density, inflation, terms of trade, expenditure on health, and policy on social inclusion have positive signs while GDP growth, active population, trade openness, expenditure on education, gratuities, subventions, and policy on social protection have negative signs in the long run. Consequently, the study concluded that expenditure on social activities and transfer payments, particularly on pensions and gratuities have the capacity to positively influence on income disparity in Nigeria. This study, therefore, recommended among others that prompt payment of pension to the retirees should be encourage at…

Keywords: Transfer Payment, Income inequality, Human Capital Theory, ECM

Citation: Ozegebe, R.O., & Oladele, T.C. (2024). Reducing Income inequality in Nigeria: Does Transfer Payment Matter?. International Journal of Innovative Research in Accounting and Sustainability, 9(4), 69-78.