would affect African inequality through the third component of the decomposition. In other words, if relative price levels remained the same, i.e. all incomes are multiplied by the same factor, African inequality would not change for a scale-invariant measure such as GE(0). Of course, the overall effect of a change in relative prices will depend also on the country’s population size.

The ranking of countries by their mean consumption changed quite substantially as a result of the new PPPs in the middle group of countries, while the tails remained largely similar. Figure A1 plots the rank of a country in the distribution of 2011 PPP means against its rank according to the 2005 PPP means (all for benchmark year 2008). Relative to other African countries, Nigeria and Zambia improved their ranking as a result of the 2011 PPPs. This means that its price level declined between the 2005 and 2011 ICPs, leading to an improvement in consumption expenditure in real terms. While this re-ranking analysis is useful as a first step, it misses a number of elements which are important for assessing the effect on African inequality, such as differences in population sizes and the absolute size of the movement.<sup>54</sup> Figure A2 offers a more direct look at the effect of the PPP change on between-group inequality. We plot the contribution of differences between countries to overall inequality for all countries for which we have data in the 2008 benchmark year. The chart is very similar to Figure 3 in the main text. The two bars show the contribution under 2005 and 2011 PPPs respectively. As the previous chart showed, the new PPP data led to a downward revision of the price level in Nigeria and Zambia relative to countries with similar means. Because the between-group inequality component includes population weights, the contribution to overall GE(0) inequality has been much smaller for Zambia than Nigeria. Among the largest changes, DRC, Mozambique and Tanzania increased their contribution to total inequality, while Madagascar, Nigeria and Zambia moved in the opposite direction. Angola changed from a positive to a negative contribution, its mean thus moving across the regional mean. Given that the revision of the PPP exchange rate hardly affected the overall level of inequality, the negative and positive effects on the between component largely cancelled out.

Instead of considering a specific measure of inequality, Table A2 looks at the entire African distribution. Each decile of the 2008 African distribution was split according to the population contribution from each country (similar to Figure 9). The table shows the change in these population contributions as a result of the change in PPP exchange rates. As a result of the new PPP exchange rates, DRC increased its population share in the bottom decile by 12.1 percentage points (from 37% to 49% of the African population in the poorest decile). In contrast, the share of Mozambique in the eighth African decile decreased by 1.8 percentage points (from 3.3% to 1.5%). Given its population size, Nigeria had the largest upward movement, while Angola, Madagascar, Sudan and Zambia moved in the same direction. On the other hand, DRC, Mozambique, Tanzania and South Africa have reduced their shares in higher percentiles.

> 54 In other words, the between-component in the GE(0) decomposition relies on log-differences in mean consumption, not differences in ranks. Furthermore, we use population weights throughout, so the size of the country obviously matters.

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