Trends in the sources of income inequality in the Philippines: an application of the gini decomposition analysis to fies 1985-2000

Professorial Chair Lecture

Development Fund/Diamond Jubilee Professorial Chair Lecture

Place

College of Economics and Management Multipurpose Room, UPLB

Date

6-23-2004

Abstract

Despite past attempts of the government to alleviate poverty in the country, incomes of Filipinos especially among the lowest end of the distribution remains to be unjustly low compared to their more affluent counterparts. Over the years, income inequality continues to be one of the basic problems that beset the country. This paper sought to establish the sources and trend of income inequality for the past two decades. The study analyzed the six most recent data sets of the Family Income and Expenditure Survey (FIES) conducted by the National Statistics Office (NSO) published in the following years: 1985. 1988, 1991, 1994, 1997. and 2000. The Gini ratio and the Lorenz curve were used to establish the degree and trend in the country's income inequality over the 15-year period. To source out the income components that contributed most to income inequality, the Gini decomposition analysis was employed.

Results of the study showed that over the last two decades, the Gini ratio of the country's income distribution had been declining. This was explained by the observed improvement in the distribution of incomes received from the agricultural sources. However, such an improvement had proven to be modest. The more significant source of income inequality points to incomes derived from non-agricultural sources, particularly those coming from wages and salaries paid by industries. What is alarming is that inequity from this source continues to worsen over time. The study concluded that balancing the emphasis of government development strategies designed to address income inequality through more non-agricultural-based programs can greatly help reduce income inequality.

Location

UPLB Main Library Special Collections Section (USCS)

College

College of Economics and Management (CEM)

Language

English

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