Economic Systems and Income Inequality in the Nigerian Economy: A Comprehensive Analysis

Abstract

This study examines economic system andincome inequality in the Nigerian economy using mix methods research design comprising theoretical, empirical and descriptive analysis. The Nigerian economy adopts a mixed form of economy and studies on income inequality and distribution are mixed. It is observed that no single theory describes income inequality as a result of the nature of the concept. Empirical evidence equally shows divergence of opinions in the various studies of income inequality. While Gini coefficient indicates that income inequality has been on the increase in Nigeria in the years under consideration, income share held by lowest 20 percent slightly increased between 2015 and 2018 possibly associated with higher GDP growth. These divergent results equally affect income distribution outcomes in Nigeria. Target one of Goal 10 of the sustainable development goals is the reduction of inequality to be achieved in 2030.The study recommends that for developing economies such as Nigeria, a feasible theory of income distribution should go beyond the narrow determinants of growth and recognize the importance of history and institutions in a holistic model of political economy and the existence of various sociological conditions constraining mobility (location, cost, religion, age, conventions and rules). Additionally, a comprehensive strategy within a consistent political framework is required. There is also need to socialize the nation’s productivity in all major or strategic sectors as democracy is continually enthroned in the country.