Economic Disparities in Colonial Kenya: Income Inequality and Wage Differentiation

Abstract

Economic inequality is at the core of the development issues of many countries in sub-Saharan Africa,
including Kenya. Many researchers also point to colonial history in the quest to explain the high levels of
modern-day inequalities. The historiography of Kenya as a discriminatory settler colony is conducive to
highlighting the legacies of extractive institutions. The overt racial disparities of this era, however, also
disguise subtle developments and differentiation among the indigenous population. The dissertation,
thus, investigates the broad questions related to the colonial economic disparities in Kenya by asking:
What were the levels and trends of income inequality? What were the drivers of overall inequality?
However, it also zooms in on the sector-specific inequalities in the public, private and self-employed
sectors, with a particular focus on the African labour force.

This dissertation seeks to address the broad overarching questions in four distinct but closely related
papers that, one at a time, narrow the focus from economy-wide trends on specific sectors and the role
of the restrictions and opportunities mediated by colonial rule in the overall inequality trends. The papers
depart from the previous theories and debates in the historiography of Kenya and elaborate on these by
providing both quantitative and qualitative evidence utilising an original dataset collected from the
archives and libraries in the UK and Kenya. The dissertation combines the methods of social tables with
estimates of real wages, skill premiums, and public-private wage differentials to gain a more thorough
understanding of inequality trends each year.

It shows that inequalities measured by the Gini coefficients were relatively low in the early decades of
the colonial period but continued to grow over time. This does not, however, mean that the colony was
particularly equal since the high Inequality Extraction Ratio throughout the period of investigation
indicates that much of the potential inequality was turned into actual inequality. Explanations for this can
be found in the institutional framework that created racial disparities. Focus on extractive institutions
does, nevertheless, simplify the complex colonial reality, where the dominance of European settlers was
challenged by labour protests and political participation by Africans. Meanwhile, the barriers and
opportunities of the colonial period distinguished some indigenous groups while others lagged behind.