DRAFT

EPD INCOME DISTRIBUTION PROJECT

DATA ON INCOME DISTRIBUTION IN PAPUA NTEW GUINEA

E. Beverly Dowres

Division Working Paper No. 1981-9

July 1981

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 a Working Paper are those of the author and may notbe attributed to the.World Bank or its affiliated organizations.

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DATA'ON INCOME DISTRIBUTION'IN

PAPUA NEW GUINEA

This paper surveys and evaluates the data on the distribution

of income in Papua New Guinea. The data which come from the Household

Expenditure Survey of 1975/76 and the Urb'an Population Survey of 1977,

relate to urban areas only. Further, the Household Expenditure Survey

excluded smaller urban areas, while the Urban Population Survey did not

yield data on non-monetary income. The data are therefore considered of

limited use for estimating the diatribution of income even of urban Papua

New Guinea. However, if combined wita future data on small urban areas,

they could be used to estimate income distribution for all urban areas.

More comprehensive data on small urban areas are expected to be generated

by the continuing urban population survey.

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DATA ON INCOME DISTRIBUTION IN PAPUA NEW GUINEA

I. Introduction

There are several sources of data on income distribution

In Papua New Guinea. The Bureau of Statistics of Papua New Guinea

publishes Taxation Statistics, a report that contains data on income

distribution for individual taxpayers. Data on the size distribution

of labor income is collected through an annual census of private1/

establishments, condueted by mail. Jackson (1981) estimated the

country's income distribution by individual income recipients, using

data from various scattered sources. Because detailed background

materials on his estimate were not available, we could not assess its

quality.

A household expenditure survey conducted between September

1975 and February 1976 by the Bureau of Statistics yielded data on income

distribution by household for six large urban areas: Port Moresby, Lae,

Kieta/Arawa/Panguna, Rabaul, Madang and Goroka. Preliminary results

were published separately for each urban area in Household Expenditure

Survey 1975/76, Preliminary Bulletins Nos. 1 to 6, and in Summary of

Household Expenditure, Bulletin No. 7. Similar statistics relating to

cash income distribution by household were collected for selected urban

areas as part of an on-going urban population survey, which began in

1977. The survey results for the urban areas covered in 1977 were

published separately for each urban area in Urban Population Survey 1977:

Labour Force and Income, Bulletins Nos. 2 to 7.

1/ United Nations Statistical Office, "A Survey of National Sources ofIncome Distribution Statiatias",Panwa

This paper briefly evaluates the results of the 1975/76

Eousehold Expenditure Survey and the 1977 Urban Population Survey.

1/II. T'ne 1975/76 Household ExDernditure Survey

The plurpose of this survey was to

Provide more up-to-date information about the averagespending of urban Papua New Guinean households for use indetermining the composition of the "basket of goods and services"to which the consumer price index relates. A secondary purposewas to obtain related information on income distribution,housing and other socio-economic conditions of nationals livingin these towns.

An original sample of 952 private dwellings was selected

from the six major urban areas using a multi-stage cluster sampling2/

technique. First, each urban area was stratified into "stable,"3/

"growth," and "village and settlement" strata. Then, from each stratum

within each urban area, sample households were randomly selected using

the same sampling fraction. A household was defined as a "group of4/

persons who eat most meals together and have a common food supply."

Income referred to pre-tax income.

1/ Bureau of Statistics, Papua New Guinea, Household Expenditure Survey1975/76, Preliminary Bulletins Nos.1 to 6, and Summary of HouseholdExpenditure, Bulletin No. 7, Port Moresby, undated.

2/ At the time of the 1971 census, 6% of the total population of PapuaNew Guinea were living in the urban areas covered by the survey.Within these urban areas, 20% of the population were not citizens.Appendix Table A-1 summarizes the-population coverage of the sample.

3/ "'Stable' areas are those areas other than villages or settlementswhere houses existed at the time of the 1971 Population Census. 'Growth'areas are those areas other than villages or settlements where housinghas been constructed since June 1971...'Village' areas are the areaswhere traditional villages occur. 'Settlement' areas are those areaswith mainly self-help housing, sometimes called squatter se'ttlementsor resettlement areas."

4/ Visitors staying less than three months were excluded.

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Detailed information was collected on 585 households in

574 dwellings through interviews and bookkeeping methods Csee Appendix

Table 2). Information on income was collected directly from household

members. Questions on income addressed separate categories of income,

including gifts and other non-regular items. In addition, income and

expenditure diaries were completed by all adult (15 years and over)

members of participating households. The diaries were kept for a period

of two weeks. The households were visited by interviewers at least

three times a week during the two-week recording period. Diaries were

checked for consistency in the field, bEut values for income-in-kind and

for some missing data were estimated in the head office. Irregular

income items, and those not received fortnightly, were converted to a

fortnightly basis. Fortnightly income from all sources and from all

household members was added to obtain gross fortnightly income for each

household.

The size distribution of pre-tax income of households ranked

by fortnightly earned cash income was published for each of the six urban

areas; these distributions are included here as Appendix Tables A-3 to 8.

Table.1 presents the- percentile distributions for each of the

six urban areas included in the survey and highlights the variation in both

the average level of income and the distribution of income from one area

to another. Howeverl as the. sample was clustered in six of the largest

urban areas of Papua New Guinea, the results cannot be considered as11

representative of all urban areas. The exclusion of many smaller urban

1/ Kieta/Arawa/Panguna is a recently developed urban area associated with.the establishment of copper mining on the island of Bougainville andis not likely to be typical of other small urban areas.

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areas from the sample implies that a combined size distribution of

total income for the six urban areas would give a biased view of the

distribution for all urban areas.

Table 1: DISTRIBUTION OF TOTAL INCOIIE OF HOITSEHOLDS IN

SIX URBAN AREAS - 1975/76

Cumulative Percent of Total Income of Households

Cumulative Percent of Port Kieta/Households with Lowest Moresby Lae Madang Goroka Rabaul Arawa/Earned Cash Income Panguna

10 3.5 5.9 3.5 3.0 4.3 4.1

20. 7.4 9.0 8.8 8.7 9.6 10.2

30 12.8 14.9 14.7 16.3 16.1 17.2

40 19.2 21.5 23.0 24.6 23.5 25.2

50 26.4 31.1 31.3 33.9 31.0 34.2

60 34.9 40.3 40.9 43.9 39.6 44.0

70 45.7 49.9 51.2 54.4 49.7 54.8

80 58.7 59.2 62.7 65.9 62.1 67.7

9D 75.2 76.9 78.4 78.3 77.4 81.8

(95) C85.9) (85.0) (86.3) (84.71 C84.5) (87.2)

100 lQ0.0 100.0 100.0 100.0 100..0 100.0

Gini Coefficient 0.333 0.280 0.271 0.242 0.274 0.272

Percent of Households 32.2 25.0 14.7 12.5 11.7 3.9

Average Earned Cash Incomeper Household (Kina perFortnight) 159 116 84 86 84 179

Average Total Income perHousehold (Kina perFortnight) 183 154 106 122 110 222

Average Cash Income asPercent of Average TotalIncome .32.. 82.,

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III. Urban Population Survey (UPS)

The Urban Population Survey of 1977 covered the urban areas

of Port Moresby, Lae, Madang, Rabaul and Popondetta. The purpose of this

ongoing survey is to "provide estimates of the total population of each

city or town and measures of the economic activities and related character-1/

istics of its citizen population.'" Included with the results for each

area covered in 1977 was a size distribution of fortnightly cash income

for households of citizens (these distributions are presented in Appendix

Table A-9). It is the opinion of the Bureau of Statistics that

It is difficult to compare the results of the UPS with theresults of other similar surveys which have been carried out in PapuaNew Guinea, because of the differing procedures and questionnairesused. However, the results of the 1977 round of the UPS are fullyconsistent among the towns covered (Port Moresby, Lae, Madang, Rabauland Popondetta), which will enable valid comparisons to be made betweenthese towns.

The geographic coverage of the UPS of 1977 was restricted to a

small selection of urban areas. It was similar to that for the Household

Expenditure Survey of 1975/76, but within the areas included, the sample

sizes were from three to five times larger. Hence, the sampling errors

would be smaller. The income coverage in the UPS was cash income (excluding

gifts of cash); income-in-kind was not included. The wider coverage of

questions used in the UPS, the absence of detailed questions on income and

the absence of any questions on expenditures suggest the possibility of larger

non-sampling errors in the income responses. This possibility, and the

exclusion of income-in-kind, which constituted between 10 and 18% of the

total income in the urban areas covered by the Household Expenditure Survey,

further suggest that the results of the UPS are inferior to those of the

1/ Bureau of Statistics, Papua New Guinea Urban Pa

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Household Expenditure Survey as indicators of the size distribution of

household income in urban areas.

IV. Conclusion

The data on the size distribution of income in Papua New

Guinea are not at the national level. Rather, they refer to a few selected

urban areas. Because these urban areas are some of the largest, they

probably are not representative of all urban areas. However, as the urban

population survey proceeds and more data become available on smaller urban

areas, a more representative distribution could be constructed for all

urban areas by combining available data on large urban areas with the new

data on smaller urban areas.

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REFERENCES

Bureau of Statistics, Pepua New Guinea, Household Expenditure Survey 1975/76,Port Moresby, Preliminary Bulletins Nos. 1 to 6, and Su=mary ofHousehold Expenditure, Bulletin No. 7, undated.

Bureau of Statistics, Papua New Guinea, Summary of Statistics 1975/76, PortMoresby, February 1979.

Bureau of Statistics, Papua New Guinea, Urban Population Survey 1977: LabourForce and Income, Port Moresby, Bulletins Nos. 2 to 7.

East Asia and Pacific Regional Office, The World Bank, Papua New Guinea:Economic Situation and Prospects, Report No. 2157-PNG, December1978.

Jackson, Dudley, "The Distribution of Incomes in Papua New Guinea" (unpublished),National Planning Office, Papua New Guinea, February 1981.

United Nations Statistical Office, "A Survey of National Sources of IncomeDistribution Statistics: Papua New Guinea" (mimeo), New York,1' 30.

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APPENDIX: TABLES

Table A-1: POPULATION COVERAGE OF THE HOUSEHOLD ESYENDITURE SURVE' -

1975/76,

Population Sample

Census 1971 Estimate Number Number Percent

1975 of of of 1975

-'000 Percent '000 Households Persons Population

/aUrban 276.3 11.1 585 3,356

/bCitizen 231.8 9.3 334.3 585 3,356 1.00

/cNon-Citizen 44.5 1.8 n.a. 0 0

Rural 2,213.6 88.9/b

Citizen 2,203.6 88.5 2,383.3 0 0/c

Non-Citizen 10.0 0.4 n.a. 0 0

Total 2,489.9 100.0 2,756.1 585 3,356 0.12/b

Citizen 2,435.4 97.8 2,717.6 585 3,356 0.12

Non-Citizen 54.5 2.2 38.5 0 0

n.a. - not available.

/a "An urban area is defined as an area urban in character and with a populationof 500 or more persons and at least 500 persons per square mile (193 persquare kilometre)."

/b "Citizens are "persons who became automatic citizens of Papua New Guinea onIndependence Day (16 September 1975)."

/c Only total figures are available.

Source: Bureau of Statistics, Papua New Guinea, Summary of Statistics 1975/76,Port Moresby, February 1979, p. 8, Table 3, and Household ExpenditureSurvey, Preliminary Bulletins Nos. 1 to 6.

Appendix

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Table A-2: URBAN HOUSEHOLD COVERAGE OF THE HOUSEHOLD EXPENDITURE SURVEY -

1975/76

Kieta/Port Arawa/

Moresby Lae Panguna Rabaul Madang Goroka

Number of DwellingsSelected 318 131 134 137 107 125

Dwellings Excluded 136 47 54 49 21 42

Expatriate Head 97 29 39 19 6 22Vacant 23 13 7 15 7 11Others 16 5 8 15 8 9

Non-Respondents 9 2 10 4 2 2

Number of Dwellingsincluded 173 82 70 84 84 81

Number of HouseholdsIncluded 176 84 70 89 84 82

Percent of PrivateHouseholds Covered 2 1 3 4 5 8

Average Size of House--holds in Sample 6.6 6.3 4.7 5.3 5.6 4.8

Source: Bu-eau of Statistics, Papua New Guinea, Household Expenditure Survey,Preliminary Bulletins Nos. 1 to 6.

Appendix

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Table A-3: FORTNIGHTLY INCOME OF PRIVATE HOUSEHOLDS - 1975/76

PORT MIORESBY

Households inCash Income Sample Income of Households in SampleEarned per eHousehold Cash Wages and(Kina per Income SalariesFortnight) Number Percent Earned in kind Other Total Percent

0-39 6 3.4 120 24 96 240 0.7

40-59 15 8.5 810 60 165 1,035 3.2

60-79 30 17.1 2,100 90 480 2,670 8.3

80-99 15 8.5 1,320 105 300 1,725 5.4

100-119 16 9.1 1,744 32 208 1,984 6.2

120-139 16 9.1 2,048 112 176 2,336 7.2

140-159 9 5.1 1,341 81 153 1,575 4.9

160-179 12 6.8 2,040 60 168 2,268 7.0

180-199 8 4.6 1,544 32 152 1,728 5.4

200-239 15 8.5 3,270 255 165 3,690 11.4

240-279 9' 5.1 2,322~ 108 153 2,583 8.0

280-319 9 5.1 2,691 45 234 2,970 9.2

320-399 9 -5.1 3,195 135 243 3,573 11.1

400 and 7 4.0 3,507 126 224 3,857 12.0More

All Households 176 100.0 28,052 1,265 2,917 32,234 100.0

Source: Bureau of Statistics, Papua New Guinea, Household Expenditure Survey,Preliminary Bulletin No. 1, Port Moresby, p. 30, Table 24.

Appendixr

Table A-4: FORTNIGHTLY INCOME OF PRIVATE HOUSEHOLDS - 1975/76

LAE

Households inCash Income Sample Income of Households in Sample (Kina)Earned perHousehold Cash Wages and

Fortnight) Income SalariesNumber Percent Earned in Kind Other Total Percent

0 - 39 7 8.4 161 35 217 413 3.2

40 - 59 18 21.4 972 126 396 1,494 11.6

60 - 79 10 11.9 700 110 230 1,040 8.0

80 - 99 9 10.7 810 54 540 1,404 10.9

100 - 119 8 9.5 856 64 168 1,088 8.4

120 - 139 8 9.5 1,024 72 112 1,208 9.3

140 - 179 10 11.9 1,560 130 220 1,910 14.8

180 - 239 8 9.5 1,616 168 264 2,048 15.8

240 and More 6 7.2 2,028 138 168 2,334 18.0

All Households 84 100.0 9,727 897 2,315 12,939 100.0

Source: Bureau of Statistics, Papua New Guinea, Household Expenditure Survey,Preliminary Bulletin No. 2, Lae, p. 30, Table 24.

Appendix

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Table A-5: FORTNIGHTLY INCOME OF PRIVATE HOUSEHOLDS-1975/76

KIETA/ARAWA/PANGUNA

hIncome of Households in Sample (Kina)Cash Income SampleEarned perHousehold Cash Wages and(Kina per Income SalariesFortnight) Number Percent Earned in Kind Other Total Percent

-0 - 59 - 4 5.7 - 192 88 32 312 2.0

60 - 99 8 11.4 640 120 248 1,008 6.5

100 - 139 12 17.2 1,416 324 120 1,860 12.0

140 - 179 15 21.4 2,385 435 180 3,000 19.3

180 - 239 14 20.0 2,828 476 84 3,388 21.9

240 - 279 9 12.9 2,331 423 171 2,925 18.9

280 - 439 8 11.4 2,752 200 56 3,008 19.4

All Households 70 100.0 12,544 2,066 891 15,501 100.0

Source: Bureau of Statistics, Papua New Guinea, Household Expenditure Survey,Preliminary Bulletin No. 3, Kieta/Arawa/Panguna, p. 27, Table 22.

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Appendix

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Table A-6: FORTNIGHTLY INC0t'E OF PRIVATE HOUSEHOLDS-1975/76

RABAUL

Cash Income Sehold Income of Households in Sample (Kina).Earned per SampleHousehold Cash Wages and(Kina per Income SalariesFortnight) Number Percent Earned in Kind Other Total Percent

0 - 19 4 4.5 44 4 168 216 2.3

20 - 39 9 10.1 216 54 144 414 4.3

40 - 59 21 23.6 1.092 63 336 1,491 15.6

60 - 79 20 22.5 1,360 80 280 1,720 18.0

80 - 99 8 9.0 728 48 88 864 9.1

100 - 119 11 12.3 1,210 66 198 1,474 15.5

120 - 159 8 9.0 1,056 56 256 1,368 14.4

160 - 399 8 9.0 1,736 64 184 1,984 20.8

All Households 89 100.0 7,442 435 1,654 9,531 100.0

5ourc2: Bureau of Statistics, Papua New Guinea, Household Expenditure Survey,Preliminary Bulletin No. 4, Rabaul, p. 29, Table 24.

Appendix-14 -

Table A-7: FORTNIGHTLY INCOME OF PRIVATE HOUSEHOLDS-1975/76

I4ADANG

Cash Iicome Income of Households in Sample (Kina)Earned per

Household Cash Wages and(Kina pet Income SalariesFortnight) Number Percent Earned in Kind Other Total Percent

0 - 39 13 15.5 247 0 351 598 6.7

40 - 59 20 23.8 1,020 120 260 1,400 15.7

60 - 79 16 19.1 1,104 64 352 1,520 17.0

80 - 99 10 11.9 940 50 90 1,080 12.1

100 - 119 8 9.5 864 24 80 968 10.9

120 - 159 11 13.1 1,496 77 330 1,903 21.3

160 - 269 6 7.1 1,356 54 42 1,452 16.3

All Households 84 100.0 7,027 389 1,505 8,921 100.0

Source: Bureau of Statistics, Papua New Guinea, Household Expenditure Survey,Preliminary Bulletin No. 5, Madang, p. 29, Table 24.

Appendix

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Table A-8: FORTNIGHTLY INCOME OF PRIVATE HOUSEHOLDS-1975/76

GOROKA

Cash Income Households in Income of Households in Sample (Kina)Earned per SampleHousehold Cash Wages and(Kina per Income SalariesFortnight) Number Percent Earned in Kind Other Total Percent

0 - 39 11 13.4 231 44 176 451 4.6

40 - 59 14 17.1 742 84 350 1,176 12.1

60 - 79 20 24.4 1,380 60 720 2,160 22.2

80 - 99 16 19.5 1,392 80 528 2,000 20.5

100 - 139 10 12.2 1,200 130 180 1,510 15.1

140 - 330 11 13.4 2,222 176 44 2,442 25.1

All Households 82 100.0 7,167 574 1,998 9,739 100.0

Source: Bureau of Statistics, Papua New Guinea, Household Expenditure Survey,Preliminary Bulletin No. 6, Goroka, p. 29, Table 24.

~. . . . , .. . . .

Appendix

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Table A-9: PRIVATE HOUSEHOLDS BY FORTNIGHTLY CASH INCO,E-1977

FIVE URBAN AREAS

Cash Incomeper Household Port Moresby Lae Madang Rabaul Popondetta(Kina perFortnight) No. Percent No. Percent No. Percent No. Percent No. Percent

None ) ) 125 4.2 ) )) ) ) )

1 - 19 ) 972 7.1 ) 610 9.1 175 5.9 )630 20.9 ) 90 10.7) ) ) )

20 - 39 ) ) 159 5.4) )

40 - 59 1,051 7.7 750 11.2 547 18.5 410 13.6 80 9.5

60 - 79 1,995 14.5 1,100 16.4 566 19.2 510 16.9 210 25.0

80 - 99 1,761 12.8 1,120 16.7 265 9.0 330 11.0 130 15.5

100 - 119 1,001 7.3 670 10.0 253 8.6 270 9.0 ))170 20.3

120 - 139 1,159 8.4 540 8.1 209 7.1 220 7.3 )

140 - 159 892 6.5 580 8.7 158 5.4 140 4.7 )) 60 7.1

160 - 179 579 4.2 ) 136 4.6 ) )) 460 6.9 )200 6.6

180 - 199 683 5.0 ) 116 3.9) ))

200 - 299 2,334 17.0 ) 185 6.3 ) )100 11.9) 860 12.9 )300 10.0 )

300 and More 1,312 9.5 ) 57 1.9 ) )

All Households 13,739 100.0 6,690100.0 2,951 100.0 3,010 100.0 840 100.0

Average CashIncome perHousehold 154 115 100 99 119(Kina perFortnight)

Source: Bureau of Statistics, Papua New Guinea, Urban Population Surve 1977:Labour Force and Income, Bulletins Nos. 2-7.