Climate Shocks, Agricultural Intensification, and Income Inequality in Sub-Saharan Africa: New Evidence from Instrumental Variable Estimates and Threshold Models

Abstract This paper examines how climate shocks affect income inequality in Sub-Saharan Africa and whether fertilizer use moderates these effects. Using data from 45 countries over 2000–2023, we employ two-way fixed-effects and instrumental-variable models, complemented by threshold and dynamic-panel analyses. Temperature shocks significantly increase income inequality, while favorable rainfall anomalies reduce it. Although fertilizer use is associated with lower inequality on average, IV estimates show that greater fertilizer intensity amplifies the inequality effects of heat stress, revealing an intensification–vulnerability trade-off. The findings highlight the importance of climate-resilient agricultural strategies to mitigate inequality under increasing climate risks. JEL Classification: Q54; D63; Q12; Q18; O15