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El Nino or El Peso? Crisis, poverty, and income distribution in the Philippines

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  • Datt, Gaurav
  • Hoogeveen, Hans

Abstract

Using household survey data for 1998, the authors assess the distributional impact of the recent economic crisis in the Philippines. The results suggest that the impact of the crisis was modest, leading to a five percent reduction in average living standards, and a nine percent increase in the incidence of poverty - with larger increases indicated for the depth, and severity of poverty. The greater shock came from El Nino, rather than through the labor market. The labor market shock was progressive (reducing inequality) while El Nino shock was regressive (increasing inequality). Not all households were equally vulnerable to the crisis-induced shocks. Household and community characteristics affected the impact of the shocks. Ownership of land, made households more susceptible to the El Nino shocks, higher levels of education made households more vulnerable to wage, and employment shocks. The impact of the crisis was greater in more commercially developed communities. Occupational diversity within a household helped mitigate the adverse impact. There is some evidence of consumption smoothing by the households affected by the crisis, but the poor were less able to protect their consumption, which is a matter of policy concern.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2466.

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Date of creation: 31 Oct 2000
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Handle: RePEc:wbk:wbrwps:2466

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Keywords: Environmental Economics&Policies; Inequality; Poverty Assessment; Economic Theory&Research; Health Economics&Finance;

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  1. Arsenio M. Balisacan, 2001. "Poverty in the Philippines : An Update and Reexamination," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 38(1), pages 15-52, June.
  2. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  3. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 780, Princeton University, Department of Economics, Industrial Relations Section..
  4. Asep Suryahadi & Sudarno Sumarto & Lant Pritchett, 2003. "Evolution of Poverty During the Crisis in Indonesia," Asian Economic Journal, East Asian Economic Association, East Asian Economic Association, vol. 17(3), pages 221-241, 09.
  5. Orbeta, Aniceto Jr. C. & Manasan, Rosario G. & de Guzman, Generoso & Reyes, Celia M., 1999. "Social Impact of the Regional Financial Crisis in the Philippines," Discussion Papers DP 1999-14, Philippine Institute for Development Studies.
  6. Beegle, K. & Frankenberg, E. & Thomas, D., 1999. "Measuring Change in Indonesia," Papers, RAND - Labor and Population Program 99-07, RAND - Labor and Population Program.
  7. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, Econometric Society, vol. 52(3), pages 761-66, May.
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Cited by:
  1. Stefan Dercon & Luc Christiaensen, 2008. "Consumption risk, technology adoption and poverty traps: evidence from Ethiopia," WEF Working Papers, ESRC World Economy and Finance Research Programme, Birkbeck, University of London 0035, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
  2. Schady, Norbert R., 2001. "Convexity and sheepskin effects in the human capital earnings function : recent evidence for Filipino men," Policy Research Working Paper Series 2566, The World Bank.
  3. Ariaster Baumgratz Chimeli & Francisco de Assis de Souza Filho, 2004. "Climate Forecasting And Emergency Policies Evidence Of Opportunities From Ceará, Brazil," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of G 118, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  4. Haddad, Lawrence James & Gillespie, Stuart, 2001. "Effective food and nutrition policy responses to HIV/AIDS," FCND briefs, International Food Policy Research Institute (IFPRI) 112, International Food Policy Research Institute (IFPRI).
  5. Sawada, Yasuyuki & Estudillo, Jonna P., 2006. "Trade, Migration, and Poverty Reduction in the Globalizing Economy: The Case of the Philippines," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2006/58, World Institute for Development Economic Research (UNU-WIDER).
  6. Lawrence Haddad & Stuart Gillespie, 2001. "Effective food and nutrition policy responses to HIV|AIDS: what we know and what we need to know," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(4), pages 487-511.
  7. Keil, Alwin & Teufel, Nils & Gunawan, Dodo & Leemhuis, Constanze, 2007. "Mitigating the impact of El Nino-related drought on smallholder farmers in Central Sulawesi, Indonesia: An interdisciplinary modelling approach combining linear programming with stochastic simulation," 106th Seminar, October 25-27, 2007, Montpellier, France, European Association of Agricultural Economists 7942, European Association of Agricultural Economists.
  8. Echevin, Damien, 2011. "Vulnerability and livelihoods before and after the Haiti earthquake," Policy Research Working Paper Series 5850, The World Bank.
  9. Keil, Alwin & Zeller, Manfred & Wida, Anastasia & Sanim, Bunasor & Birner, Regina, 2006. "Determinants of Farmers' Resilience towards ENSO-Related Drought: Evidence from Central Sulawesi, Indonesia," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia, International Association of Agricultural Economists 25592, International Association of Agricultural Economists.
  10. World Bank, 2012. "The Welfare Effects of Extreme Weather Events : Insights from Three APEC Case Studies," World Bank Other Operational Studies 13039, The World Bank.
  11. Echevin, Damien, 2011. "Characterizing poverty and vulnerability in rural Haiti: a multilevel decomposition approach," MPRA Paper 35659, University Library of Munich, Germany.
  12. Montalbano, Pierluigi, 2011. "Trade Openness and Developing Countries' Vulnerability: Concepts, Misconceptions, and Directions for Research," World Development, Elsevier, Elsevier, vol. 39(9), pages 1489-1502, September.

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