Analyzing the Relationship Between Exposure to Extreme Weather and Economic Inequality in the Philippines

• Main Authors: Palanca-Tan, Rosalina, Bayani-Arias, Jaimie Kim
• Format: text
• Published: Archīum Ateneo 2017
• Subjects: inequality decomposition; extreme event exposure; Theil decomposition analysis; Economics; Economic Theory
• Online Access: https://archium.ateneo.edu/economics-faculty-pubs/100; https://archium.ateneo.edu/cgi/viewcontent.cgi?article=1099&context=economics-faculty-pubs
• Institution: Ateneo De Manila University

This paper looks into the relationship between typhoon exposure and inequality in per capita income and per capita expenditure of households in the Philippines by comparing the change in the Theil L and Theil T inequality indexes between 2009 and 2012 across different exposure groups. A decomposition analysis of the Theil index was also undertaken to establish the relative contributions of within-exposure group inequality and between-exposure groups inequality to total inequality. Conforming to the paper‘s hypothesis, the group that has the highest exposure to typhoons was found to experience a worsening of both income and expenditure inequality while the group with the least exposure showed no change in expenditure inequality and an improvement in income equality. The result supports the importance of implementing policies that increase the resilience of local communities in the Philippines. Apart from short-term financial damages, exposure to adverse weather may also bring an added burden of worsening economic inequality.