Lesson 3: Poverty and Inequality: BBE 4303-Economic Development
Lesson 3: Poverty and Inequality: BBE 4303-Economic Development
Lesson 3: Poverty and Inequality: BBE 4303-Economic Development
Poverty and
Inequality
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Absolute poverty is when Relative poverty is when households
household income is below a have some money for the basic
certain income level (poverty needs but not enough for anything
threshold) that will not more than that. Some experts would
suffice to meet a person/ say that relative poverty is when
basic needs including food, households receive 50% less that the
clothing and shelter. In this average household income.
state of poverty, economic
growth will have no or will
have very little effect on
their living condition.
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Who are more Vulnerable to Poverty?
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Table 1. Philippine Poverty Trends 2003-2015
Source: https://ourworldindata.org/extreme-poverty 8
: https://ourworldindata.org/extreme-poverty 9
While this is a definite improvement in
terms of statistical figures, it remains an
intolerable hardship in terms of actual
account, this still means that over 17
million Filipinos are living in extremely
miserable living conditions
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Table 2. Philippine Provinces with Highest Poverty Incidence
THOUGH POVERTY IS A
NATIONAL PROBLEM, IT IS
NOT EVENLY DISTRIBUTED,
WHERE SOME PROVINCES
OR REGIONS ARE BESET
WITH A HIGHER POVERTY
RATE COMPARED TO
OTHERS.
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Income Inequality
•Income inequality is an extreme
disparity of income distribution with a
high concentration of income or wealth
usually held by a small percentage of the
population.
1.Gini Coefficient
2.Lorenz Curve
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The Gini coefficient/index was developed by
Corrado Gini in 1912. The coefficient ranges from 0 (or 0%)
to 1 (or 100%), with 0 representing perfect equality and 1
representing perfect inequality.
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Lorenz Curve is a way of showing the distribution of income/wealth within
an economy. The curve shows the cumulative share of income from different
sections of the population.
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https://www.investopedia.com/terms/g/gini-index.asp
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JUST HOW UNEQUAL IS
INCOME INEQUALITY Name
Forbes List of Richest Filipinos ,2019
Net worth (US $)
IN THE PHILIPPINES?
1.Sy siblings $17.2B
2.Manuel Villar $ 6.6B
3.John Gokongwei, Jr. $ 5.3B
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Poor vs. Not Poor
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POLICY OPTIONS
What kinds of economic and other policies might LDC
government adopt to reduce poverty and excessive inequality
while still promoting economic growth?
1. Altering the functional distribution of income through
policies designed to change relative factor prices.
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3. Reducing the size distribution at the upper levels through
progressive income taxes.
POLICY OPTIONS
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