Professional Documents
Culture Documents
in the Philippines
MPM RD Applied Economics
Joey Sescon
Ateneo School of Government
Main source: Philippine Development Report 2013:
Creating More and Better Jobs
The World Bank 2014
2006
2009
2012
2006
2009
2012
6,703
8,448
9,385
23.4
22.9
22.3
10.8
10
10
POVERTY INCIDENCE
39.2 percent
38.3
35.2
Employed
Unemployed
21.9
18.7
Monetary Approach
Exercise: given community with 10 HH
Household Income
1
10
2
20
3
30
4
40
5
50
6
60
7
70
8
80
9
90
10
100
Poverty gap
Poverty severity
Monetary Approach
Typical Income Distribution in an Urban Poor Community in
Payatas, Quezon City (Assuming Poverty Line = Php20,500)
Person
15,500
16,500
17,500
18,500
19,500
20,500
NP
21,500
NP
22,500
NP
23,500
NP
10
24,500
NP
Poverty Concepts and Measurements
Monetary Approach
Assume a Poverty Threshold of Php20,500
Person
Annual Income
(Php)
15,500
5000
16,500
4000
17,500
3000
18,500
2000
19,500
1000
20,500
NP
21,500
NP
22,500
NP
23,500
NP
10
24,500
NP
Poverty Concepts and Measurements
Monetary Approach
Average Poverty Gap (APG)
APG = Php15,000/10 = 1,500
Poverty Gap Index (PGI)
PGI = APG/Yp = 1,500/20,500 = 0.073
Poverty Severity Index (PSI)
PSI = Sum(PG/Yp)2/N = .013
Poverty Concepts and Measurements
Monetary Approach
Person Annual Inc Poor (P), Not
(Php)
Poor (NP)
Poverty Severity
Index
15,500
5000
(5,000/20,500)2/10
16,500
4000
(4,000/20,500)2/10
17,500
3000
(3,000/20,500)2/10
18,500
2000
(2,000/20,500)2/10
19,500
1000
(1,000/20,500)2/10
20,500
NP
Total =15,000
PSI = 0.013
21,500
NP
APG = 15,000/10
22,500
NP
PGIndex = .073
23,500
NP
10
24,500
NP
Poverty Concepts and Measurements
10
11
Person
Annual Income
(in Php1,000)
15.5
16.5
17.5
18.5
4
5
20.5
21.5
22.5
10
3.2
6.8
3.6
19.5
6
8
9
Deciles
23.5
24.5
4.0
8.4
4.4
4.8
Person
12
13
14
15
16
17
18
19
20
Total
Annual Income
(in Php1,000)
40.5
11.9
Deciles
7.1
50.5
60.5
70.5
80.5
11.1
26.2
15.1
90.5
110.5
120.5
145.5
1,000
20.1
46.7
100
26.6
100
Measuring Inequality
Share of Total Income of the Poor Poorest Quintile and the
Richest Quintile,19852012
5.2
4.7
4.9
4.4
4.4
4.7
53.9
52
55.5
54.8
53.4
14
Measuring Inequality
Another common way to analyze personal
income statistics is to construct what is known
as a Lorenz curve.
The number of income recipients is plotted on
the horizontal axis in cumulative percentages.
The vertical axis shows the share of total
income received by each percentage of
population. It is also cumulative up to 100%,
meaning that both axes are the same length.
Poverty Concepts and Measurements
15
Lorenz Curve
1.00
1.00
0.90
Percentage of Income
0.80
I
0.70
0.60
H
0.50
0.40
0.30
F
E
0.20
C
B
0.10
A
0.00
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Percentage of Population
16
Window of opportunity
A unique window of opportunity exists today.
The country is benefiting from strong
macroeconomic fundamentals, political stability,
and a popular government.
However, the extractive nature of some of the
countrys political and economic institutions
that concentrate power and opportunity in the
hands of a very small subset in society poses
significant challenges to achieving lasting
inclusive growth.
Window of opportunity
The Aquino Government has demonstrated that it is
not afraid to tackle vested interests in areas that had
previously been too sensitive to reform. Several
reforms have successfully started, notably in public
financial management, tax policy and administration,
anti-corruption, and social service delivery.
The government now needs to maximize the chances
that the country will follow a more inclusive growth
path and meet the jobs challenge
Exercise
You have $100
Asset A will give you back 5% return
Asset B will give you 10% return of
total investment divided by total
investors
Workshop 1
Give an example of externality (either
positive or negative) and one example
of public good in your province/region.
Discuss the issues and solutions/
policies of the externality and the
public good. (Use demand and supply
graphs.)
Workshop 2
Identify one example of market failure and one
government failure (related or not) in your
province/region. Discuss the issues and
proposed solution/policies to these market and
government failures. (Use demand and supply
graph to illustrate). Examples of market failures
are existence of monopoly, in some degree also
oligopoly, absence/ shortage of suppliers of a
good, presence of negative externalities and
tragedy of common resource goods (but do not
include these two).