“dynamics and decomposition of inequality of outcomes and inequality of opportunities: a special...

Research topicOutline

Issues and objectivesData and Methodology

Empirical illustration and ResultsConclusions

ERF Workshop: The Political Economy of ContemporaryArab SocietiesBeirut, Lebanon

Hatem JEMMALI

University of Sousse, TunisiaFaculty of Economic Sciences and Management of Sousse

[email protected]

24th August, 2016

1/25 Hatem JEMMALI Workshop ERF August 2016




Research topic

Title

“Dynamics and Decomposition of Inequality of Outcomesand Inequality of Opportunities: A special focus on Tunisia”

Co-authored withMohamed Amara





Outline

1 Issues and objectives

2 Data and Methodology

3 Empirical illustration and Results

4 Conclusions





IssuesObjectives

Looking beyond the macroeconomic performance

Tunisia was neither an economic miracle nor a full success story, but it wasdoing better than its Arab and MENA neighbors. Despite its economic

growth of about 5% last decade and low poverty rate

12,1

9,099,66

5,78

3,66

2,14

0

2

4

6

8

10

12

14

1985 1990 1995 2000 2005 2010

Poverty gap at $2.5 a day (PPP) (%)

Income inequality is still high and persistent

43,43

40,24

41,6640,81

41,42

36,06

30

32

34

36

38

40

42

44

46

1985 1990 1995 2000 2005 2010

Gini





IssuesObjectives

Further, large disparities remains in economic welfare and access to basic

services such as healthcare, sanitation...

Per capita householdexpenditure (TD)

2693 − 32282113 − 26931613 − 21131491 − 1613

Access to safe water (%)

94.74 − 98.3489.12 − 94.7461.87 − 89.1255.45 − 61.87

Access to sanitation (%)61.76 − 90.5248.44 − 61.7636.85 − 48.4425.84 − 36.85

So long as the Tunisias Inlands remain ignored relative to its

more-developed coast, discontent and unrest will plague its political and

economic recovery.





IssuesObjectives

Main Objectives (First Paper)

Given the importance of economic inequality and inequality of opportunity forpoverty reduction and inclusive development, we attempt in this researchproject to analyze the extent and evolution of these inequalities in Tunisia.

Firstly, we aim to

◮ investigate the structure and dynamics of consumption inequality, usingdata from Tunisian Household Budget Surveys, by combining a descriptiveanalysis of inequality with an empirical investigation of the sources ofurban-rural and regional disparities

◮ explore how disparities in the distribution of household characteristics andin the returns to these characteristics contribute to inequality acrossregions, in order to shed a light on the role of the current developmentpolicies.





IssuesObjectives

Main Objectives (Second Paper)

Secondly, focusing on health and nutritional outcomes, we aim to

◮ go beyond the one-dimensional consideration of economic inequality to awider perspective of the inequality of opportunities.

◮ assess how far is Tunisia (and each region in particular) from the ideal ofequality of opportunity.

◮ draw up detailed charts of inequality of health and nutritionalopportunities for Tunisia.

◮ identify the main circumstances that are beyond the control of childrenand affecting their development outcomes.

Specifically, the main question is: What are the chances that a Tunisian

child will have adequate access to basic healthcare and nutrition regardless

of his or her circumstances at birth, such as gender, place of birth, and

family background?





DataMethodology

Data used

Two data sources are used:

◮ The two National Surveys on Household Budget, Consumption andStandard of Living (HBCLSs) for 2005 and 2010 (First paper) and,

◮ The last wave of the Multiple Indicator Cluster Surveys on children andwomen (MICS4) conducted by the National Statistical Institute of Tunisia(NSI) and the UNICEF in 2011/2012 (Second paper).





DataMethodology

Key Methodology points (First paper)

The empirical methodology is divided into three parts:

◮ A descriptive analysis of the inequality trends using a set of indicators suchthe Gini coefficient (Lorenze Curve), ratio of consumption of the top andbottom deciles (P90/P10) as well as the consumption shares of thedifferent population quintiles.

◮ Static decomposition analysis based on the use of the most commonlydecomposed measures in the inequality literature: the mean log deviation(Theil-L) and the Theil-T indices in per capita total consumptionexpenditure. Such analysis permit to identify the share of inequality

explained by the between-group differences in the attributes

◮ Unconditional quantile decomposition based on the Recentered InfluenceFunction (RIF) regression to analyze the sources of inequality between

rural and urban areas as well as between inland and littoral zones.





DataMethodology

Unconditional quantile decomposition

The technique consists of decomposing the welfare gaps at various quantiles ofthe unconditional distribution into differences in households endowmentcharacteristics (endowment effects) such as education, age, employment etc.,and differences in the returns to these characteristics (returns effect).The procedure is carried out in two stages:

◮ Estimating unconditional quantile regressions on log real per capitahousehold consumption for rural and urban (inland and littoral)households, then constructing a counterfactual distribution that wouldprevail if rural (inland) households have received the returns that pertainedto urban (littoral) area. The comparison of these counterfactual andempirical distributions permits to estimate the part of the welfare gapattributable to endowment and returns effect as follows:

Q iθ− Q

jθ=

{Q i

θ− Q∗

θ

}+

{Q∗

θ− Q

jθ

}=

(X i

− X j

)βiθ+ X j

(βiθ− β

jθ

)

◮ The second stage involves dividing the endowment and return componentsinto the contribution of each specific characteristic variable.





DataMethodology

Key Methodology points (Second paper)

The empirical methodology used in the second study in divided in two steps:◮ Computing the level of inequality of health and nutrition opportunities

◮ by estimating the following logit model:

Ln(p[I = 1/xi1, ..., xik ]

1 − p[I = 1/xi1, ..., xik ]) = θ0 +

k∑

j=1

θjxij (1)

◮ in order to obtain the estimated probability of access to each service:

pi =exp(θ0 +

∑kj=1 θjxij)

1 + exp(θ0 +∑k

j=1 θjxij)(2)

◮ The dissimilarity index D-index is then calculated as:

D =1

2C

n∑

i=1

wi |pi − C | (3)

◮ and finally the HOI index is computed at the national and regional scales as:

HOI = C(1− D) (4)

◮ Estimating the contribution of different circumstances that are beyond thecontrol of children and affecting their development outcomes using theShapley decomposition method.





DataMethodology

Outcomes and circumstances variables

Outcome variables

◮ Access to basic healthcare andhygiene

◮ during pregnancy◮ at birth◮ at early postnatal period

◮ Nutrition (Z-scores)◮ Stunting (height-for-age)◮ Wasting (weight-for-height)◮ underweight (weight-for-age)

Circumstances

◮ Gender of child

◮ Region of residence and location

◮ Education level of Father andMother

◮ Economic wellbeing

◮ Gender of HH

◮ Age of HH

◮ Demographic decomposition ofhousehold





Main Findings of the first study

Table: Static decomposition of Inequality by Household attributes

2005 2010

Share of inequality (%) explained by Share of inequality (%) explained by

Theil-L Theil-T Theil-L Theil-T

Gender Head 1.98 (.005) 1.74 (0.011) 3.17 (.005 ) 2.83 (.006)

Age of Head 2.56 (.006) 2.43 (0.012) 2.11 (.004) 2.04 (.006)

Education of Head 13.23 (.005) 14.80 (0.012) 11.55 (.004) 13.11 (.006)

Activity Status of Head 1.68 (.006) 1.36 (0.011) 1.84 (.004) 1.60 (.006)

Employment of Head 3.10 (.006) 2.94 (0.013) 3.63 (.006 ) 3.70 (.008)

Family composition 10.14 (.006) 8.62 (0.011) 8.40 (.005) 7.49 (.006)

Urban/Rural Status 7.90 (.005) 7.16 (0.012) 11.33 (.004) 10.68 (.006)

Regional Location 7.03 (.006) 6.49 (.010 ) 10.99 (.004) 10.41 (.007)





Main finding of the first study

The core findings of such decomposition reveals that

◮ households demographic composition, educational level of the head, andregional and urban/rural locations are the main drivers of overall inequalityin Tunisia.

◮ Household geographic characteristics (region of residence and urban-ruralstatus) are found to significantly contribute to the welfare disparity in thecountry and their magnitude seems to rise over time.





Urban-rural spatial decomposition

.15

.2.2

5.3

.35

.4

Diff

eren

ce in

log

annu

al p

er c

apita

exp

endi

ture

s

0 .2 .4 .6 .8 1Quantile

(a) HBCLS 2005

.15

.2.2

5.3

.35

.4

0 .2 .4 .6 .8 1Quantile

(b) HBCLS 2010

Endowment effects Return effects

Figure: Unconditional Quantile Decomposition of Urban-Rural gap





Urban-rural spatial decomposition

It appears from the results of the urban-rural spatial decomposition that:

◮ endowment effects dominate obviously the returns effects at the higher tailof the distribution, illustrating higher welfare gaps between well-off ruraland urban households.

◮ differences in household demographic and educational characteristics andemployment opportunity are found to matter the most for inequality at thebottom and middle tails of the distributions. while employmentcharacteristics (employment status and sector of activity of the head) areamong the main factors accounting for the gaps between urban and ruralhouseholds at upper quantiles.

◮ convergence over time between rural and urban rich households in Tunisia,principally due to an obvious decline of the differences in householdsendowments in human capital, the disparity in returns to the features isfound to rise particularly for this class of households.





Littoral-inland spatial decomposition

.18

.2.2

2.2

4.2

6

Diff

eren

ce in

log

real

per

cap

ita to

tal e

xpen

ditu

res

0 .2 .4 .6 .8 1Quantile

(a) HBCLS 2005

.2.2

5.3

.35

.4

0 .2 .4 .6 .8 1Quantile

(b) HBCLS 2010

Endowment effects Returns effects

Figure: Unconditional Quantile Decomposition of Urban-Rural gap





Littoral-inland spatial decomposition

The results of the second spatial decomposition of littoralinland inequalityreveal that:

◮ Returns effects appear to dominate the endowment effects particularly atupper quantiles.

◮ The gap between littoral and inland households in endowments seems tobe narrowing over time, while the differences in returns are increasing overtime particularly for well-off households

◮ Such differences are mainly driven by an increase of differences in returnsto employment.





Main Findings of the second study (Health outcomes)

97.61

1.48

96.16

97.77

1.60

96.21

98.78

1.01

97.78

96.28

1.45

94.89

99.61

0.34

99.27

93.62

4.11

89.77

35.56

36.66

22.52

59.19

13.76

51.04

53.47

36.00

34.22

050

100

150

200

HEA1

Anten

atal

Care

Birth

place

Assist

ed B

irth

Check

up

posn

atal

Imm

uniza

tions

(HEA2)

HEA3

Wat

er

Sanita

tion

Coverage Dissimilarity HOI

Figure: Inequality of opportunityin access to Healthcare services

0.115.44

10.74

18.33

2.857.41

11.48

5.36

10.43

27.85

0.105.69

12.13

20.50

3.81

9.85

11.49

5.05

9.77

21.59

1.446.003.88

32.73

10.37

7.97

16.16

2.340.81

18.30

2.754.412.08

40.49

5.98

16.97

15.08

1.340.3210.58

1.710.951.75

43.88

2.637.95

11.66

5.450.59

23.42

1.035.182.39

20.65

28.18

13.18

4.445.410.84

18.70

0.440.872.05

17.02

45.01

5.28

6.180.340.48

22.32

0.071.920.62

17.09

10.84

6.63

7.811.830.23

52.95

0.372.280.83

14.64

39.03

7.73

10.160.360.51

24.10

020

4060

8010

0S

hapl

ey d

ecom

posi

tion

(%)

HEA1

Antenatal Care

Birth place

Assisted Birth

Check up posnatal

Immunizations (HEA2)

HEA3Water

Sanitation

Gender of Child

Household size

Siblings < 5 years

Region

Urban/rural status

Father’s Education

Mother’s Education

Age of HH

Gender of HH

Household’s welfare

Figure: Shapley decomposition ofHealthcare opportunities





Main Findings of the second study (Health outcomes)

◮ The high level of equality of opportunity, above 90%, indicates that a themajority of children, in Tunisia, benefit from all healthcare servicesregardless of their circumstances living and region of residence.

◮ Inequalities in access to improved drinking water and sanitation facilitiesstill persist around the country (low level of HOI)

◮ Regional variables (urban/rural location and region) added to thehousehold’s welfare explain all the largest part of the variations in accessto immunizations and housing facilities.





Main Findings of the second study (Nutrition outcomes)

89.72

1.61

88.28

91.59

1.74

89.99

98.36

0.62

97.75

98.51

0.47

98.04

96.78

1.30

95.52

050

100

150

200

NUT1 Stunting Wasting Underweight Blood tests

Coverage Dissimilarity HOI

Figure: Inequality of opportunityin access to nutrition

6.043.49

12.37

20.23

21.53

9.39

9.52

0.790.83

15.80

3.712.02

11.60

21.56

17.84

13.28

10.34

0.651.85

17.15

3.236.981.99

22.29

3.09

10.94

15.78

6.432.64

26.63

3.284.174.47

24.73

2.17

12.01

8.84

4.371.86

34.10

1.860.785.68

37.90

2.79

11.83

22.11

4.251.73

11.07

020

4060

8010

0S

hapl

ey d

ecom

posi

tion

(%)

NUT1

StuntingWasting

Underweight

Blood tests

Gender of Child

Household size

Siblings < 5 years

Region

Urban/rural status

Father’s Education

Mother’s Education

Age of HH

Gender of HH

Household’s welfare

Figure: Shapley decomposition ofnutritional opportunities





Main Findings of the second study (Nutrition outcomes)

◮ The D-index of the nutrition outcome is very low, suggesting no significantdisparity among circumstance groups. Accordingly, the HOI for all thenutrition indicators are high and close to the coverage value.

◮ Geographical and economic circumstances added to parent’s educationexplain the large percentage of the variability in anthropometric measures





Conclusions

◮ Notwithstanding the rural development, conducted by several governmentsover the last decades, urban households in Tunisia continue to be muchbetter endowed than their rural counterparts.

◮ Improvement of the education levels in rural areas is not necessarilyfollowed by an improvement of the returns to education and that urbanmarkets still better reward human capital attributes than rural marketswould.

◮ Though littoral households enjoy higher features, the overall welfareinequality is principally explained by the higher reward of these features incoastal regions.





Conclusions

◮ Tunisia has experienced, during the recent decades, a significant progresswith regards to the availability and access to basic healthcare services andensuring a good nutrition for early children.

◮ But, in some rural inland areas, there are areas of persistent and emergingconcerns that require urgent interventions, such as access to improvedwater and sanitation facilities.

◮ Geographical circumstances such as urban-rural and region of residenceand educational and economic characteristics of households have playedthe main role in the inequality of health and nutritional opportunities.

◮ Findings of the two studies lead us to note that targeted interventions

and more appropriate investments in favor of the less advantaged

population in rural and inland areas may afford a significant potential

for improving the overall equity in the society.





Thank you for your attention25/25 Hatem JEMMALI Workshop ERF August 2016




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