Household income GAP analysis: An empirical evidence
A reduction in the household income gap will ensure equitable socioeconomic development and growth. The Malaysian household is categorised into three groups of households: the bottom 40%, the middle 40%, and the top 20%. These household categories are a cut-off point of the household income levels f...
Saved in:
| Main Author: | |
|---|---|
| Format: | Thesis |
| Published: |
2022
|
| Subjects: | |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | A reduction in the household income gap will ensure equitable socioeconomic development and growth. The Malaysian household is categorised into three groups of households: the bottom 40%, the middle 40%, and the top 20%. These household categories are a cut-off point of the household income levels for the 7.3 million households in 2019. The household income gap between these three groups has increased over the past 20 years. The income gap between household groups has led to several disadvantages and distortions, such as slow and weak economic growth, social conflict, vulnerability to depression, undercuts the progress in education and health, and rising economic and political instability that reduces investment. This study conducted an empirical analysis to investigate the short run and long run relationship between physical capital, human capital, technological progress, education expenditure and household income gap in Malaysia for the period from 1999 to 2019. Based on the theory of Solow’s growth model, this study used a panel cointegration estimation of the dynamic ordinary least square (DOLS), the fully modified ordinary least square (FMOLS) and the Granger causality analysis. The variables in the estimated model were analysed to determine their influences of independent variables on the household income gap.
The result showed that there was a short run and long run relationship running from physical capital (PC), human capital (HC), technological progress (TECH), and education expenditure (EXP) to the household income gap (HIG). The PC, TECH, and EXP were positive and significant, while HC was negatively and significantly related to the household income gap of M40 and B40. The PC, TECH, and EXP were positive and significant, while HC is negatively and significantly related to the household income gap of T20 and M40. Finally, the PC, TECH, and EXP were positive and significant, while HC is negatively and significantly related to the household income gap of T20 and B40.
In other words, the PC, TECH, and EXP increased the household income, while HC decreased the household income in the short run and long run. This study contributed to the existing empirical literature by providing new insight into household income dimensions by household groups in 13 Malaysian states and three federal territories in Malaysia. The results of this study enable policymakers’ implementation of the “Peneraju Masa Hadapan” policy to develop and improve the socioeconomic growth of Malaysia strategically, raise the living standards of the B40 and M40 household group in terms of accessibility to educational opportunities and employment prospects and balanced social status. |
|---|