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DRAFT

EPD INCOME DISTRIBUTION PROJECT

DATA ON INCOME DISTRIBUTION IN THE PHILIPPINES

V.V. Bhanoji Rao

Division Working Paper No. 1980-4

August 1980

Economic and Social Data DivisionEconomic Analysis and Projections DepartmentDevelopment Policy StaffThe World Bank

Division Working Papers report on work in progress and are circulatedfor Bank staff use to stimulate discussion and comment. The views andinterpretations in the Working Paper are those of the author and maynot be attributed to the World Bank or its affiliated organizations.


This paper contains a brief review of the data on income distribu-

tion for the Philippines. Following an evaluation of the data from the

Family Income and Expenditure Survey (FIES) for 1970-71, the data on

average income and average expenditures by income class were used to

derive, from the distribution of expenditures by income class, a more

representative distribution of income for rural, urban and all Philippines.

This paper can be expanded as and when published data from the

FIES 1975 become available. However, as is discussed in this paper, the

quality of the data from the FIES 1975 is generally considered to be

inferior to that of the FIES 1971.

ECONOMIC AND SOCIAL DATA DIVISION

ECONOMIC ANALYSIS AND PROJECTIONS DEPARTMENT

AUGUST 1980

TABLE OF CONTENTS

Page

I. Introduction ............................................. 1

II. Sources of Data: A Brief Review ......................... 2

III. The 1971 and 1975 FIES Income Estimates .................. 4

IV. The 1971 Survey: A Description ........................... 6

V. The 1971 Survey Data: An Evaluation .................... 7

VI. Derivation of Income Distributions from ExpenditureDistributions for 1970-71 .............................. 11

VII. Implications of the Derived Distributions ................ 13

Bibliography ................................................... 16

Annex Tables ................................................... 17


I. Introduction

The April 1980 edition of the World Bank's social indicator data

sheet for the Philippines contains summary data on income distribution for

1961, 1971 and 1975. Data for the first two years were also reported in

S. Jain (1975).

The data for 1971 (actually May 1970-April 1971) were extensively

/1used by researchers in the Philippines and abroad- and were also reported

in the World Development Indicatois for 1979 and 1980. It is now agreed by

researchers (see Mangahas and Barros, 1979) and some Bank staff (see Chander

and Dailly, 1979) that the 1975 survey did not cover the upper income groups

adequately, and hence the data are unreliable. This fact was emphasized in

/2a recent Bank report (in draft),- which considered the data on expenditures,

rather than those on income, when discussing the incidence of poverty. In

view of the consensus against the reliability of the 1975 data, either the

1971 data have to be used or one has to await data from a survey planned for

the early 1980s.

This paper contains an evaluation of the 1971 data on income dis-

tribution. Despite the limitations of the data on income, which are noted,

income distributions were derived for rural, urban and all Philippines, using

the respective distributions of expenditures. It is believed that the dis-

tributions are fairly representative of actual distributions.

/1 See Mangahas and Barros (1979).for a review of the research and an exhaustivebibliography. From a draft paper of Ullman (1974), one notes that the Bankhas obtained some special tabulations for 1971.

/2 World Bank, East Asia and Pacific Regional Office, The Philippines: Poverty,Basic Needs and Employment, (confidential draft) Report No. 2984-PH,3 volumes, May 9, 1980.

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/1II. Sources of Data: A Brief Review-

The sources of data for recent years are shown in Table 1. The

Philippine Family Income and Expenditure Surveys (FIES) conducted at

approximately five-year intervals since 1956 are the principal sources for

income distribution in the Philippines. All the surveys contained a compre-

hensive question on income. Nevertheless, the total personal income estimated

from the surveys for the relevant years except 1975 amounted to only about

two-thirds of the personal income derived from the national accounts.- In

1975, according to the estimates of Lim (1978), aggregate household income

based on the FIES (40,060 million pesos) constituted only 44 percent of total

personal income (88,955 million pesos) based on the national accounts. However,

as will be shown in Section III below, the personal income estimated from the

national accounts may be slightly less than the Lim estimate, so that the

FIES estimate may equal 53 percent of the personal income from the national

accounts. Even that proportion is still quite low.

The National Demographic Survey (NDS), 1973 had only two questions

on income, namely, the respondent's estimates of cash and non-cash income.

Under-reporting of income was considered to be high, since the principal

purpose of the survey was to obtain demographic information.

The socioeconomic survey of 1975, like the FIES, collected compre-

hensive data on income. Respondents also estimated their rents and home-consumed

production. Average household income came to only 5,731 pesos, slightly less

than the 5,840 pesos of the FIES 1975. Thus the socioeconomic survey also

apparently underestimated income.

/1 The discussion in this section is based on Mangahas and Barros (1979), which,as noted, contains a rather exhaustive bibliography, as well as a detaileddiscussion of income inequality issues pertaining to the Philippines.

/2 See Lim (1978) for data and review.

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Table 1: INCOME DISTRIBUTION IN THE PHILIPPINES--SOURCES OF DATA FOR RECENT YEARS

Source and latest Sample sizeyear for which (No. of house- Commentsdata are available holds)

Family Income and Expenditure 11,659 Conducted since 1956Survey, 1971 and 1975 (1971) by the National Census

and Statistics Office.

National Demographic Survey, 8,434 Conducted in 1968 and 19731973 by the Population Institute

of the University of thePhilippines.

Socio-Economic Survey, 1975 2,920 Conducted by the School ofEconomics and the Popula-tion Institute, Universityof the Philippines, inassociation with the Devel-opment Academy of thePhilippines.

Survey on Filipino Family 1,770 Conducted by the PhilippineHousehold: Distribution Social Science Councilof Income and Consumption (PSSC).Expenditure Patterns, 1974

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The survey on Filipino Family Households (PSSC Survey), which

covered the period October 1973 - September 1974, included 1,770 households

(out of an estimated total of over 6 million). The sampled households came

from 18 areas which did not fully represent the nation as a whole. The esti-

mated average household income derived from the survey was 8,901 pesos, much

higher than that of any other survey, but 14 percent less than the average

household expenditures of 10,185 pesos. Further, the estimate of personal

income derived from the survey came to 70 percent of the personal income

estimated from the national accounts. While this result gives some credence

to the validity of the survey as compared with other surveys, the Gini ratio

for income distribution was 0.62, much higher than the generally expected

range of 0.4 to 0.5 for the Philippines and similarly placed developing coun-

tries. In spite of its limitations, the PSSC survey is remarkable for its

comprehensive coverage of income and the documentation of sampling and non-

/1sampling errors.--

III. The 1971 and 1975 FIES Income Estimates

The brief account in Section II indicates that the FIES is about

the best source of data on income distribution for the Philippines. However,

for reasons noted below, only the data for 1971 were used in the evaluation

presented in this paper.

The Bank report on poverty, basic needs and employment in the Philippines,

presented in May 1980, provides a comparison of the FIES estimates of income and

expenditures for various years and compares them with the estimates derived from

/1 The abovekaccount emphasizes quantitative aspects. For a review of thequalitative aspects of survey administration, data processing, etc., ingeneral, see Chander and Dailly (1979) and Chander (1980).

-5-

the national accounts. The data for 1971 and 1975 from the Bank report are

provided in Table 2. On its face, the 1971 survey appears to be better than

the 1975 survey insofar as crude indicators of under-reporting can be used as

a guide. Moreover, the 1975 data are not available in published form, nor

are they readily available in unpublished form-- Thus the 1971 survey was

used in the detailed description and evaluation presented here.

Table 2: COMPARISON OF NATIONAL ACCOUNTS AND FIES ESTIMATES OF FAMILY INCOME

AND EXPENDITURES, 1971 AND 1975

Item 1971 1975

National accounts personal income (mill. pesos) 34,790 76,257

National accounts personal consumption (mill. pesos) 30,778 67,644

No. of families (thousands) 6,347 6,860

National accounts average family income (pesos) 5,481 11,116

National accounts average family consumption (pesos) 4,849 9,861

FIES average family income (pesos) 3,736 5,840

FIES average family expenditure (pesos) 4,566 6,940

FIES income - national accounts income ratio 0.68 0.53

FIES expenditure - national accounts expenditure ratio 0.94 0.70

Source: World Bank, East Asia and Pacific Regional Office, The Philippines:

Poverty, Basic Needs, and Employment: A Review and Assessment,

Vol. III (Confidential draft), May 9, 1980, p. 28.

/1 The Bank's regional department had access to unpublished data, suppliedon a confidential basis.

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/1IV. The 1971 Survey: A Description-

Reference Period: May 1970 to April 1971.

Sampling procedure: Municipalities, enumeration districts and house-

holds were selected in stages for each province and for urban and rural areas.

Sample size: The household was the ultimate sampling unit. But

income and expenditure data were for families. However, the disparity between

"household" and "family" is not expected to be significant with respect to

distribution of income and expenditures in summary form.

Data collection procedure: Interviews were conducted in May 1971. A

great deal of information was collected on the labor force, as well as on income

and expenditures. For most households, data were collected in a single interview.

Income and expenditures: The data on income and expenditures included

both cash and non-cash items. The questionnaire from which income was obtained

from different sources was quite long, based on a comprehensive income concept.

Imputed rents on owner-occupied houses were included as part of income, as

were most transfer payments. Annual family expenditures were also tabulated.

Expenditures for food, beverages and tobacco were obtained for the week preced-

ing the interview;/2 for several other regularly consumed items, average weekly

or monthly expenditures were the basis for annual figures. For durable goods,

actual expenditures for the 12-month period were included. Cars, jeeps and

motor boats were not treated as consumption expenditures. Personal taxes were

included in expenditures.

/1 This section is essentially a summary of the detailed description in ThePhilippines, Bureau of the Census and Statistics, Family Income and Expendi-tures: 1971, Series No. 34 in The BCS Survey of Households Bulletin,Manila: 1973.

/2 Thus seasonal factors may affect the data on food expenditures.

-7-

Reliability of data: The sample size of 11,659 households was fairly

large, though it represented only about 0.2 percent of total Philippine house-

holds. The main questions on reliability are likely to arise not from sampling,

but from non-sampling errors. Data were obtained in one interview for a variety of

items, all in very great detail, and where interviewers and respondents got tired,

some inaccuracies might have been introduced in the reporting and recording.

There was also the problem of lapses in recall with respect to income and

expenditures in kind. Some differences in the basis of valuation of home-

grown food, etc. might occur across respondents and interviewers. Most

of these problems, however, are not peculiar to the Philippine survey, but are

common to moqt surveys of family income and expenditures.

V. The 1971 Survey Data: An Evaluation

The published data on income and expenditures in the report, Family

Income and Expenditures: 1971, are tabulated for all Philippines and its

various geographic regions. Since the survey followed closely and was based

on the sample frame of the 1970 census, not much would be gained by comparing

the data from the two. For instance, data from the survey on the number of

families by family size were used to arrive at the population covered by the

survey--36.5 million persons, very close to the estimated population of about

37.8 million on May 1.

As noted earlier, the survey did not cover personal income adequately,

but seems to have covered personal expenditures quite adequately (see Table'2

above). The survey data on income and expenditures by income class for the

Philippines as a whole and its rural and its urban areas respectively are shown

in Tables A.1, A.2 and A.3 in the Annex. The information in Table A.1 indicates

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that as many as 94 percent of the families spend more than what they earn!

This finding is difficult to accept, even though it is generally expected that

some families, especially in the lower income groups, can have considerable

dissavings.--

The data in Table A.1 also indicate that the personal dissaving of

Philippine families is 4.7 billion pesos, as against an estimate derived from

/2the national accounts of family savings of about 4 billion pesos.-- From

Table A.1 it can be seen that the last three income groups experience a posi-

tive savings and that their savings taken together total about 1.2 billion

pesos. This is still very much less than the figure of 4 billion pesos.

Thus even if the dissavings of the lower income groups are ignored, the total

of savings for all income groups would still not come close to that computed

from the national accounts. While this may be so, the least that can be done is

to assume that for families in the first 10 or less income groups, the levels of

expenditures by income class provided in Tables A.1 through A.3 are better indi-

cators of income than are the reported average incomes themselves.

There is one problem with using the average expenditure levels to

show income distribution and for the computation of summary measures of

inequ&lity. Consider, for instance, the data for rural Philippines in Table 3.

/1 In India, for instance, 6.8 percent of the households have negative savings,according to a 1975-76 survey. See National Council of Applied EconomicResearch, Household Income and Its Disposition, New Delhi: The Council,January 1980, p. 197.

/2 The figure is derived from the data in Table 2 (average family income of5,481 pesos and average expenditures of 4,849 pesos give an average savingsof 632 pesos per family). Expenditure in FIES included spending due todirect taxes. Thus, saving here is net of direct taxes.

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Table 3: RURAL PHILIPPINES--AVERAGE FAMILY INCOME ANDAVERAGE EXPENDITURES BY INCOME CLASS, 1970-71

Number of Average AverageIncome class families family family

(pesos) ('000) income expenditures(peso) (peso)

Less than 500 292 341 1,607

500 - 1,000 700 755 1,985

1,000 - 1,500 666 1,248 2,407

1,500 - 2,000 615 1,738 2,822

2,000 - 2,500 447 2,236 3,225

2,500 - 3,000 351 2,741 3,601

3,000 - 4,000 505 3,442 3,926

4,000 - 5,000 288 4,446 4,744

5,000 - 6,000 168 5,467 5,482

6,000 - 8,000 192 6,861 6,505

8,000 - 10,000 91 8,903 8,082

10,000 - 15,000 74 11,792 9,115

15,000 - 20,000 19 16,740 12,643

20,000 + 26 28,239 12,551

All classes 4,434 2,818 3,474

Source: Family Income and Expenditures, 1971.

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For most of the income classes, the reported average income is very close to

the midpoint of the income ranges for those classes. Moreover, the income

classes are many. Hence, it can be assumed that intra-class inequality is not

significant, and summary measures of inequality can therefore be computed based

on average incomes. However, the average expenditures by income class are

substantially larger than the average incomes by income class and it is not

appropriate to assume that families with a given average expenditure level

/1belong to a narrow income or expenditure class.-- Thus, even though the data

in Table 3 are useful for indicating the disparities in reported income and

expenditures and provide a basis for suspecting a nearly universal downward

bias in reported incomes, the data on expenditures in the table may not be

used as a proxy for a straightforward distribution of expenditures by expendi-

ture class as shown in Table A.4 in the Annex.

The difference between the distribution of families according to

average expenditure level when arranged by income class (as in Table 3) and

the distribution of families when arranged by expenditure class (as in Table

A.4) is demonstrated by the Gini ratios in Table 4 below.Table 4: CINI RATIOS FOR THREE TYPES OF INCOME/EXPENDITURE DISTRIBUTIONS,

PUBLISHED DATA FOR THE PHILIPPINES

. Gini RatiosType of distribution Rura RanioaRural Urban Total

Families by income class(Tables A.2, A.3) 0.4586 0.4542 0.4882

Families by expenditure class(Table A.4) 0.3576 0.3952 0.4110

Families by average level ofexpenditure, arranged byincome class (Table 3) 0.2532 0.3139 0.3243

/1 In Table 3, for instance, in the income class 500 - 1000 pesos, there are700,000 families with a reported average income of 775 pesos, almostequivalent to the class midpoint. However, the average expenditures ofthese families are 1,985 pesos, way above the upper limit of the income class.Thus it is not possible to assumd that the 700,000 families belong to a narrowexpenditure group such as 500 - 1,000 pesos.

- 11 -

The Gini ratios for families when arranged by average level of

expenditures (by income class) are unrealistically lower than the Gini ratios

for families when arranged by expenditure class. Thus, if expenditure levels

are to be used at all as proxies for true income levels, the distribution of

families must be considered by expenditure class, from which the income

distribution can be derived.

The family income Gini ratios in Table 4 indicate that the rural ratio

is slightly larger than the urban one. This is not generally expected. In this

respect, too, the expenditure data appear to be more realistic than the income

data. It is therefore considered appropriate that income distributions be

derived from the expenditure distributions shown in Table A.4.

VI. Derivation of Income Distributions from Expenditure Distributions for 1970-71

Table 3 shows that expenditures for the income classes through 5,500

pesos are consistently higher than income. It is assumed that income was

underreported 'and that income and expenditures can be considered equal for

those classes. Commensurate with this, in Table 5, which provides data on

expenditure distribution, it is assumed that up to and including the expendi-

ture class 5,000 - 6,000 pesos, the distribution serves as a proxy for income

distribution. (In other words, there will not be a significant number of

families who spend 5,500 pesos or less, but who have larger incomes).

It was also assumed that for families with an average expendi-

ture above 5,500 pesos, average income would be greater than average

11 The observations in the last group in Table 3 are not included, since theaverage expenditure level in that group appears to be rather low, in factslightly lower than the average expenditures of the previous group.

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expenditure, since in Table 3 average incomes exceed average expenditures

beyond the 5,500 peso level. The following 4 pairs of observations from

/1Table 3 indicate this:--

Average income (Y) Average expenditures (C)

6,861 6,5058,903 8,082

11,792 9,11516,740 12,643

These 4 pairs of observations provide a linear expenditure equation with an

r2 of 0.986: C (in thousands) = 2.4058 + 0.6033Y (in thousands). This

equation is then used to find the level of average income for the families

with C (average expenditures) above 5,500 pesos in Table 5.--

With regard to urban, families, average expenditures are considered

to be a proxy for income through the average expenditure level of 7,000 pesos,

instead of 5,500 pesos as in the rural areas. For families with average expendi-

tures above 7,000 pesos, the relationship between C and Y is used to obtain

/3average income levels.--

The income distributions derived from the expenditure distributions

are shown in Tables A.5 through A.7. Some of the implications of the derived

distributions are considered in the next section.

/1 The observations in the last group in Table 3 are not included, since theaverage expenditure level in that group appears to be rather low, in factslightly lower than the average expenditure of the previous group.

/2 It is almost certain that the 4 pairs of income-expenditure levels used tofit the relationship have some error. It is hoped that the errors arerandomly distributed and affect both C and Y. This procedure for derivingthe level of income from consumption is necessary since the expendituredistribution in Table 5 is the basis for deriving the income distribution.An alternative procedure would be to allocate estimated savings to theupper expenditure classes, but there is no way to formulate a basis forsuch estimation and allocation.

/3 The readers may note that the relationship is based on rural data. Urbandata are inadequate for the purpose (see Table A.3).

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Table 5: FAMILY EXPENDITURE DISTRIBUTION, RURAL PHILIPPINES,1970-71

Expenditure Mean Number ofclass (pesos) expenditures* families ('000)

(pesos)

Less than 500 250 13

500 - 1,000 750 208

1,000 - 1,500 1,225 443

1,500 - 2,000 1,750 658

2,000 - 2,500 2,250 604

2,500 - 3,000 2,750 533

3,000 - 4,000 3,500 769

4,000 - 5,000 4,500 439

5,000 - 6,000 5,500 248

6,000 - 8,000 7,000 284

8,000 - 10,000 9,000 115

10,000 - 15,000 12,500 89

15,000 - 20,000 17,500 22

20,000 + 25,960 9

All classes 3,487 4,434

* Midpoint of the class interval except for the last class, whichis open-ended, for which the estimate was based on a pareto fitfor the last two classes.

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VII. Implications of the Derived Income Distributions

The derived distributions in Tables A.5 (rural), A.6 (urban), and

A.7 (national) provide the following information:

Rural Urban National

Average family income (pesos) 3,726 8,473 5,157

Average family savings (pesos) 238 1,473 610

Average savings rate (%) 6.4 17.4 11.8

Gini ratio 0.3941 0.4712 0.4705

The estimated average family income nationally is 5,157 pesos, 94.1

percent of the average derived from the national accounts (5,481 pesos from

Table 2). Total family savings amount to 3.9 billion pesos, close to the

4 billion pesos expected on the basis of the national accounts. The Gini

ratios appear reasonable. The urban ratio is significantly larger than the

rural ratio, as expected, not the case in the published data.

As for the decile shares, those from different sources are noted

below:

Family Percent of income received in 1970-71Percentile Data in Data in Data in Annex Derived

FIES S. Jain to WDR, 1980 in this paper

lowest 20 3.6 3.9 3.7 5.2

second 20 8.1 8.0 8.2 9.0

third 20 13.3 12.9 13.2 12.8

fourth 20 21.0 21.2 21.0 19.0

top 20 54.0 54.0 53.9 54.0

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As anticipated, the shares reported in the FIES report, the Jain

compilation and the annex to WDR, 1980 are close, since they were all based

on the published data on income distribution of the FIES. The estimates

derived in this paper attribute slightly higher income shares to the two

bottom quintiles, while the share of the top quintile is unchanged.

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BIBLIOGRAPHY

1. Chander, R. and J.P. Dailly. "Household Surveys in the Philippines."Draft paper. The World Bank, Economic Analysis and ProjectionsDepartment, Washington D.C., 1979.

2. Chander, R. "Recent experience in household surveys in Malaysia andthe Philippines." Mimeographed paper. The World Bank, EconomicAnalysis and Projections Department, Washington, D.C., 1980.

3. Jain, S. Size distribution of income: a compilation of data. TheWorld Bank, Washington, D.C., 1975.

4. Lim, Antonio C. "An evalaution of income distribution data sources inthe Philippines." Unpublished master's thesis. University of thePhilippines, 1978 (quoted in Mangahas and Barros, 1979).

5. Mangahas, Mahar, and Bruno Barros. The distribution of income andwealth: a survey of PhilipDine research. Philippine Institutefor Development Studies, Manila, July, 1979.

6. Ullman, Carmel J. "Income distribution in the Philippines." Draftpaper. The World Bank, Development Research Center, Washington,D.C., 1974.

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ANNEX: TABLES

Table A.l: FAMILY INCOME DISTRIBUTION IN THEPHILIPPINES, 1970-71 (PUBLISHED DATA)

Number Average Average PercentIncome class of family family Pc

in pesos families income expenditure families('000) (pesos) (pesos)

Less than 500 329 337 1,641 5.2

500 - 1,000 76-7 754 2,009 12.1

1,000 - 1,500 773 1,250 2,458 12.2

1,500 - 2,000 748 1,743 2-,951 11.8

2,000 - 2,500 611 2,245 3,364 9.6

2,500 - 3,000 517 2,744 3,766 8.1

3,000 - 4,000 795 3,446 4,307 12.5

4,000 - 5,000 475 4,452 5,182 7.5

5,000 - 6,000 316 5,455 6,114 5.0

6,000 - 8,000 403 6,866 7,397 6.4

8,000 - 10,000 226 8,909 9,107 3.6

10,000 - 15,000 235 11,994 11,594 3.7

15,000 - 20,000 71 17,092 15,832 1.1

20,000 + 81 31,746 18,915 1.3

All classes 6,347 3,736 4,479 100.0


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Table*A.2: FAMILY INCOME DISTRIBUTION, RURALPHILIPPINES, 1970-71 (PUBLISHED DATA)

Number Average Average PercentIncome class of family family of

in pesos families income expenditure families('000) (pesos) (pesos)

Less than 500 292 341 1,607 6.6

500 - 1,000 700 755 1,985 15.8

1,000 - 1,500 666 1,248 2,407 15.0

1,500 - 2,000 615 1,738 2,822 13.9

2,000 - 2,500 447 2,236 3,225 10.1

2,500 - 3,000 351 2,741 3,601 7.9

3,000 - 4,000 505 3,442 3,926 11.4

4,000 - 5,000 288 4,446 4,744 -6.5

5,000 - 6,000 168 5,467 5,482 3.8

6,000 - 8,000 192 6,861 6,505 4.3

8,000 - 10,000 91 8,903 8,082 2.0

10,000 - 15,000 74 11,792 9,115 1.7

15,000 - 20,000 19 16,740 12,643 0.4

20,000 + 26 28,239 12,551 0.6

All classes 4,434 2,818 3,474 100.0

Source: Family Income and Expendittires, 1971.

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Table A.3: FAMILY INCOME DISTRIBUTION, URBANPHILIPPINES, 1970-71 (PUBLISHED DATA)

Number Average AverageIncome class of family family Percent

in pesos families income expenditure families(1000) (pesos) (pesos)

Less than 500 37 305 1,913 1.9

500 - 1,000 67 741 2,253 3.5

1,000 - 1,500 107 1,258 2,774 5.6

1,500 - 2,000 133 1,766 3,546 7.0

2,000 - 2,500 164 2,272 3,743 8.6

2,500 - 3,000 166 2,750 4,114 8.7

3,000 - 4,000 290 3,453 4,972 15.1

4,000 - 5,000 187 4,462 5,858 9.8

5,000 - 6,000 148 5,442 6,833 7.7

6,000 - 8,000 211 6,871 8,208 11.0

8,000 - 10,000 135 8,913 9,799 7.1

10,000 - 15,000 161 12,086 12,733 8.4

15,000 - 20,000 52 17,222 17,014 2.7

20,000 + 55 33,441 21,990 2.8

All classes 1,913 5,867 6,810 100.0

Source: Family Income and Expenditures, 1971 .

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Table A.4: DISTRIBUTION OF FAMILIES BY EXPENDITURE CLASS,PHILIPPINES, 1970-71

Expenditure Meanclass in expenditure Number of families ('000)pesos Rural Urban Total

Less than 500 250 13 4 17

500 - 1,000 750 208 19 227

1,000 - 1,500 1,225 443 48 491

1,500 - 2,000 1,750 658 75 733

2,000 - 2,500 2,250 604 117 721

2,500 - 3,000 2,750 533 136 669

3,000 - 4,000 3,500 769 271 1,040

4,000 - 5,000 4,500 439 239 678

5,000 - 6,000 5,500 248 203 451

6,000 - 8,000 7,000 284 284 568

8,000 - 10,000 9,000 115 161 276

10,000 - 15,000 12,500 89 220 309

15,000 - 20,000 17,500 22 75 97

20,000 + * 9 61 70

All classes ** 4,434 1,913 6,347

* Estimates were obtained by fitting a pareto distribution for thelast two classes. Estimated means are 25,960 pesos for ruraland 31,300 pesos for urban Philippines. Based on these two,the mean for the Philippines as a whole worked out to 30,613 pesos.

** 3,487 pesos for rural families, 7,000 for urban, and 4,546 for allPhilippines.


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Table A.5: DERIVED FAMILY INCOME DISTRIBUTION,RURAL PHILIPPINES, 1970-71

Averagefamily No. of families Percent ofincome '000 families

in pesos

250 13 0.3

750 208 4.7

1,225 443 10.0

1,750 658 14.9

2,250 604 13.6

2,750 533 12.0

3,500 769 17.3

4,500 439 9.9

5,500 248 5.6

7,615 284 6.4

10,930 115 2.6

16,732 89 2.0

25,019 22 0.5

39,042 9 0.2

3,726 4,434 100.0

Note: The mean income levels were derived from the meanexpenditure levels in Table A.4. Up to and includingthe average expenditure level of 5,500 pesos, averageexpenditures and average income were assumed to beequal. Above 5,500 pesos, average income (Y) was ob-tained from average expenditures (C) on the basisof the relationship

C(000) W 2.4058 + 0.6033 Y(000)

(See text for the data used to obtain the aboverelationship.)

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Table A.6: DERIVED FAMILY INCOME DISTRIBUTION,URBAN PHILIPPINES, 1970-71

Average family No. of families Percent ofincome in pesos (1 0 0 0 ) families

250 4 0.2

750 19 1.0

1,225 48 2.5

1,750 75 3.9

2,250 117 6.1

2,750 136 7.1

3,500 271 14.2

4,500 239 12.5

5,500 203 10.6

7,000 284 14.9

10,930 161 8.4

16,732 220 11.5

25,019 75 3.9

47,893 61 3.2

8,473 1,913 100.0

Note: The mean income levels were derived from the meanexpenditure levels in Table A.4. Up to and includingthe average expenditure level of 7,000 pesos, averageexpenditures and average income were assumed to beequal. Above 7,000 pesos, average income was obtainedin the same way as in the case of rural Philippines(see note, Table A.5).

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Table A.7: DERIVED FAMILY INCOME DISTRIBUTION, ALLPHILIPPINES, 1970-71

Average No. of Cumulated Cumulatedfamily families percent of percent ofincome "000) families income

in pesos (%) (%)

250 17 0.26 0.01

750 227 3.84 0.53

1,225 491 11.58 2.37

1,750 733 23.13 6.29

2,250 721 34.49 11.25

2,750 669 45.03 16.87

3,500 1,040 61.42 27.99

4,500 678 72.10 37.31

5,500 451 79.21 44.89

7,308 568 88.16 57.57

10,930 276 92.51 66.79

16,732 309 97.38 82.59

25,019 97 98.91 90.00

46,755 70 100.00 100.00

5,157 6,347 - -

Source: Derived from Tables A.5 and A.6.

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Table A.8: INCOME SHARES BY FAMILY PERCENTILES, ALLPHILIPPINES, 1970-71

Cumulated family Cumulated incomepercentile share

(%) (%)

10 2.0

20 5.2

30 9.3

40 14.2

50 20.2

60 27.0

70 35.5

80 46.0

90 61.5

95 74.9

99 90.8

100 100.0

Source: Obtained by linear interpolation from thecumulative percentages in Table A.7.

draft epd income distribution project income...

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