(DP 1991-05) Anatomy of Rural Household Welfare: The Philippines

Abstract

The paper provides a consistent set of estimates of poverty incidence in the Philippines, investigates the determinants of rural household welfare, and explores empirically an important aspect of the so-called poverty targeting problem. Regression techniques are employed to explain (i) regional differences in rural poverty incidence and (ii) the variation in rural household welfare. The regression results are used to reinterpret (or question) a number of commonplace claims concerning the character of rural poverty in the Philippines. Poverty targeting is fraught with informational problem: The poor are not easily identifiable and the cost of targeting may be quite high. In addressing this issue, the paper applies a simple computational procedure to national survey data of family incomes and expenditures. The question asked is: Given a fixed amount of money available for transfers, which particular target group in the Philippines should be the focus of attention for a maximum reduction in rural poverty? The results of the exercise offer useful insights for poverty alleviation policies.