Time Series Analysis on Union and Income Inequality in the Philippines

Date

6-2022

Degree

Bachelor of Science in Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Luisito C. Abueg

Committee Member

Gideon P. Carnaje, Luisito C. Abueg, Maria Angeles O. Catelo, Agham C. Cuevas

Abstract

This study utilized yearl;y data, from 1981 to 2018, from different sources such as the World Bank’s World development indicators database and the Philippines Statistics Authority’s 2019, 2015, and 2006 philip[pine Statistical Yearbooks, 2015 yearbook of Labor statistics, and other online data. The study applied ordinary Least Squares to find out the significance and association between union density and income inequality. Second, the Augmented dickey-fuller test was also used to check if the variables are random walks, a precondition for cointegration. Third, the Engle-Granger Cointegration test is used to check for the long run relationship between the variables. Cointegration is a prerequisite for the Error-correction Mechanism model and the Granger Causality Tests. This study is a contribution to the literature as an updated intra-country study about the relationship between union density and income inequality by using the tests stated above.

It was found that Union density and income inequality has a spurious relationship. The OLS regression showed that union density has a positive significant association with the income inequality but the Engle-Granger cointegration test revealed that they are not cointegrated/. This means that the two time-series variables have no genuine long run relationship. This means that when shocks occur, the distance between union density and income inequality could become very big, without the tendency for them to return back to a common trend. Furthermore, the high levels of income inequality in the Philippines seem to have not been caused by the low level of union density in the country. To be more specific, it is not arguable that union decline led to the growing inequality in the country

Language

English

LC Subject

Unions, Income Inequality, Time-series

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2022 E2 C67

Document Type

Thesis

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