Regression-based decompositions of the level and changes in income inequality in the Philippines
Date
2012-03-21
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Abstract
This paper aims to update an existing exploratory study on the levels of income inequality and to apply the same methodology to shed light on the sources of changes in these levels across time. Using household expenditure data for the years 2000, 2003, 2006 and 2009, we estimate standard income-generating functions and then calculate each explanatory factor's share in the disparity. We find that income inequality can mostly be attributed to the educational attainment of the household head, which has a share of about one third. Family size and access to electricity are important contributors as well, but the former's share increased during the period while the latter's share decreased by almost half. Spatial inequality, represented by urban-rural disparity and mean expenditure disparity across regions, accounts for roughly a quarter of the explained variation. The decline in the Gini, on the other hand, can be linked to greater access to electricity, despite a counteractive effect of the household head's educational attainment.
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Keywords
Income inequality, Spatial inequality, Inequality decomposition