A decomposition analysis of changes in consumption inequality and the role of population dynamics in the Philippines from 1985-2003
Date
2009-11
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Abstract
Evidence shows that the population structure of the Philippines is changing due to the average decrease in population growth rate attributed to the expansion of life expectancy at birth in the country. Studies have shown greater longevity, ceteris paribus, results in the increase in the population share of the elderly in a country. Following the methodology by Deaton and Paxson (1994), this paper uses the variance of the logarithm of total household expenditures and expenditures on human capital formation goods, taken from rounds of Family Income and Expenditures Survey (FIES) from 1985 to 2003, to measure inequality across and between cohorts. The results show that the changing demographic structure in the Philippines contributes to the increase in the inequality of overall consumption, ceteris paribus, because the consumption of the elderly population is more unequal than that of the young. Moreover, it is found that on the average inequality in consumption of human capital formation goods increases with age.
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Keywords
Decomposition analysis, Consumption inequality, Population dynamics, Income distribution, Population growth