Spatial consumption inequality in Mozambique

In this paper, I show that the trend in spatial inequality in Mozambique almost entirely explains the outstanding surge in inequality in the country over the past decade, as well as its decline immediately after the pandemic, in contrast to its secondary role in the earliest years. For this analysis, I use an innovative regression-based decomposition framework based on the Recentred Influence Function to estimate each area's contribution to inequality and a Blinder- Oaxaca approach to disentangle the nature of their contribution to spatial and non-spatial inequality trends. This rise in inequality was mainly due to a generalized drop in consumption experienced by households in the afflicted rural areas in the north and centre of the country, affected by natural disasters and growing conflict. This was aggravated by disproportionally larger economic growth in two urban areas: the Maputo area, which encompassed the capital, during the expansive phase, and the urban area of coal-rich Tete province during the recession that followed. In more recent years, the crisis disproportionally affected the capital and other urban areas, producing a strong mitigating effect on inequality that might be only temporary. The findings of this research have the potential to significantly inform policy decisions to address inequality in Mozambique, thereby contributing to the country's economic development substantially.