Persistent Regional Income Inequalities in Kenya During the COVID-19 Pandemic: Evidence from a Bi-Dimensional Inequality Decomposition Analysis

Economic downturns affect regions unevenly, highlighting regional income disparities. While some studies find that downturns reduce regional income inequality, others report persistent or worsening disparities. Kenya, the seventh most populous nation in Africa, comprises 47 counties with diverse ethnic and geographical landscapes, where regional income inequality has attracted considerable public attention. This study examined the spatial distribution of per capita Gross County Product (GCP) together with the regional and industrial factors that influenced it both during and after the COVID-19 pandemic. The bi-dimensional inequality decomposition revealed that the industrial factors driving inequality differed regionally. In the wealthier two regions, the financial and business service sector in Central region and the transportation and communication sectors in North Coast region were the primary contributors to overall inequality. In Rift Valley region, agriculture played the most prominent role. These findings aid in identifying targeted policy interventions. Despite the significant variations in per capita GCP growth rates across counties during the pandemic and subsequent recovery, the study’s analysis confirmed that the regional inequality structure remained stable over the years. While the pandemic did not significantly increase regional disparities, the nearly 10-fold difference between the minimum and maximum GCP per capita highlights the persistently high levels of inequality. This underscores the urgent need for government intervention to promote more balanced regional development. JEL: D63 N97 O18 P25 R11 R12