Decompositon analysis of income inequality in Eastern Visayas, Philippines

Abstract

This study aimed to explore and decompose income inequality in Eastern Visayas, Philippines into the following factors: location (urban-rural), age, educational attainment, and sources of income using expenditure and income approach for 2000 and 2006. Inequality in the region remains high but tends to diminish mildly. Using decomposition analysis, results revealed that inequality is mostly explained by the within-group inequality component. When decomposing inequality by income source, results showed that total inequality is largely influenced by wage income while income from agricultural sector contributed the least share to total inequality. In addition, an increase in wage income will further aggravate inequality while an increase in income from agriculture sector will tend to reduce inequality. Policy makers should refocus its efforts in enhancing agricultural productivity as means of easing out inequality in the region. © 2014 by De La Salle University, Philippines.