DOI: 10.5176/2251-2012_QQE16.40
Authors: Narissara Charoenphandhu
Abstract:
Income distribution is an issue that tends to arise and to be enhanced together with country development. Thailand has modernized economic development. However, the economic crisis emerged in Thailand in 1997. The crisis resulted in negative GDP growth rate of -2.8 percent in 1997 and -7.6 percent in 1998. Although Thailand has passed that critical period for many years, the effect of the economic crisis on income distribution should be examined to analyze the situation and lead to lessen the impact of economic crisis that might occur again. This research investigated the impact of the economic crisis on income inequality, focusing on between-occupation income inequality, inter- and intra-industry income inequality (between- and within- industry income inequality) and national income inequality. The Gini coefficient, a measure of income inequality, was estimated, comparing the year 1994 (pre-crisis period) and 1998 (crisis period). The results indicated that the income inequality between occupations decreased when the economic crisis occurred in Thailand. Gini coefficient in 1998, the crisis period, decreased comparing to Gini coefficient in 1994, the pre-crisis period. It is similar to the whole country income inequality which also became lower both in term of wages and salaries and total monthly income. However, between-industry income inequality slightly increased in 1998. The crisis did not has the same direction of effect in each industry. Therefore, intra-industry income inequality was analyzed further in detail to find the divergence of income distribution in each production sector. The sectors that seemed to obtain the impact on worse income inequality were “agriculture and fishing”, “mining and quarrying”, and “electricity, gas and water”. In contrast, the economic crisis had an effect on decreasing in income disparity for the sector of “manufacturing”, “construction”, “trade and commerce” , “transport, storage and communication”, and “services”. The economic crisis had negative impact to trade and commerce, business and real estate. This issue was multi- dimensional. More equal distribution might be caused by a reduction in people’s income, making the income gap becoming narrow as a whole. This led to trivial improvement, but more equal distribution during the crisis resulted from equal poor not equal rich. However, the target of development or income distribution improvement was to make equally high income not equally poor. The policy makers must learn from the previous crisis as well as implement the policy, which can effectively improve income distribution to elevate and sustain people’s well being in the long term.
Keywords: Income distribution; Inter- and intra- industry income inequality; Economic crisis
Updating...