Examining the contribution of household attributes and locality on household welfare inequality: a regression-based decomposition approach
Date
2009-11
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Abstract
This study focuses on examining the sources of per capita expenditure inequality in the Philippines using the Family IncomeĀ· and Expenditure Survey data for 2000 and 2006. To be able to see the share of inequality caused by differences in endowments between regions and within regions from the national-level measure, decomposition of the inequality index Theil T was undertaken. For a more in-depth analysis on the sources of inequality and to be able to see the relationship of locality and various household characteristics to household welfare measured by the log of per capita expenditure, regression runs were performed. Regression-based decomposition techniques were also done to see further how much of the total inequality is due to variations in geographical location and household characteristics.
The inequality in the living standards faced by Filipinos appears to be caused by within-group components contrary to the widespread view that it is caused by differences in endowments between regions. Hence, the results imply that poverty reduction policies should create conditions that will lessen welfare disparities within regions.
Household head characteristics specifically, educational attainment has emerged to be the highest contributor in the variance explained by the model. Likewise, the head's employment sector turned out to be a significant source of variation. Agriculture remained to be the poorest sector. Household composition factors also played an important source accounting to almost a quarter of explained variation. Location is found to account for a substantial share of variance but still not as high as the share appropriated by household attributes.
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Keywords
Family income, Family expenditure, Household expenditure, Income inequality, Consumption inequality, Inequality index