dispersion in consumption in SSA compared with the United States must involve consumption insurance mechanisms other than self-insurance (i.e., own savings), a matter to which we return in Section 5.4.

# **3.2 Rural-Urban Differences As Income Increases: Conditional and Joint Distributions**

Here, we rank households by their income and carefully study the behavior of their CIW. This analysis is conducted for rural and urban areas, respectively, in panels (A) and (B) in Table 4.<sup>44</sup> Note that while we focus on Malawi in this Section, the analogous partitions for Tanzania and Uganda can be found in the online appendix.

The average difference in the level of consumption between rural and urban areas translates into the entire distribution of income. That is, on average consumption is 2.20 times larger in urban than in rural areas, and this rural-urban consumption gap is relatively stable across all income quintiles with roughly a factor of 2, except for the top income quintile for which urban consumption is larger by a factor of 2.64 (and 3.53 for the top 1%). If we look at consumption per capita, urban consumption remains two times higher than rural consumption, which shows that the difference in levels is not driven by the larger size of rural households. Note also that the US$1 dollar per capita a day threshold is only achieved by the fourth quintile of the income distribution in rural areas, whereas in urban areas, all quintiles have per capita consumption above the US$1.

In contrast to consumption, while the rural-urban income gap is on average similar to that of consumption (i.e., 2.23), this gap increases with income. Starting at the bottom 20% of the income distribution we find similar income per capita levels between rural and urban areas (a higher level in urban areas by a factor of 1.09), but this gap increases monotonically to 2.82 for the top 20% and to 3.83 for the top 1%. Finally, as in income, the rural-urban gap in wealth also increases with income, starting with urban wealth that is 1.41 times larger than rural wealth for the bottom 20% of the income distribution and increasing to a factor of 3.62 for the top 20% of income earners and to 6.46 for the top 1%. Thus, the growth in the rural-urban gap as income increases is virtually identical for income and for wealth except for the top 1% and top 5% of the income distribution.<sup>45</sup>

> 44Hereafter, we focus on Malawi because its sample size is large enough to maintain accuracy in our estimates when we partition the distribution of CIW. The sample size for Malawi is 12,015 households, while in Tanzania it is 3,012 and in Uganda 2,337. Note that our sample size is roughly 2.5 times larger than the Survey of Consumer Finances used to conduct a similar partition for the United States in D ́ıaz-Gim ́enez et al. (2011). Analogous distributions of CIW conditional on wealth, land, and consumption can be found in the online appendix.

> 45Precisely, the rural-urban gap from the respective bottom 20% to the top 1% (and top 1% to 5%) of income earners grows by 251% (186%) in income and by a larger 355% (237%) in wealth. Instead, this increase for the second, third, and fourth quintiles of the income distribution is on average lower for wealth (21%) than for income

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