Vince Magallanes

The distribution of income within a community may be represented by the Lorenz curve. The Lorenz curve is closely associated with measures of income inequality, such as the Gini coefficient. The Gini coefficient is the most commonly used measure of income inequality. It calculates the extent to which the distribution of income among individuals within a country deviates from a perfectly equal distribution. Ranging from 0 to 100, a Gini coefficient of 0 represents perfect equality; a Gini coefficient of 100 represents perfect inequality. Institution: Corruption and Political Dynasty Philippines political culture is dynastic in nature, meaning local officials are often related to each other by blood. It is expected national resources would flow more favourably to provinces which have local governments related to the ruling political figures. These national resources are used to build infrastructure, create employment, and target poverty. Hence such ties only serve to exacerbate income inequality in Philippines. Interestingly, studies have found an opposite relationship, by running simple regressions. It is found that political dynasties are destructive in a different way. Political dynasties in this case tend to reduce economic efficiency by allocating resources selfishly and hence inefficiently. Access to the basic services is also restricted to the poor in provinces governed by political dynasties. Hence when compared to areas which are more competitive and efficient, the poor continue to remain poor. In addition, rampant graft and corruption created a rent that discriminated against the poor in favour of connected individuals and businesses. It hinders the growth of efficient yet competitive start-ups in the country without any political connection. This accentuates income and wealth inequality in the country. Geography Research has found that geography also plays an important part in the widening income inequality. Landlocked provinces often experience high transportation cost. As current research literature has shown, landlocked countries tends to have lower economic growth. Borrowing the concept to look at intra-country growth, location could thus cause a divergence in the levels of growth between different provinces within the country. In addition, the government invests selectively on infrastructure; as a result, not all provinces have easy and affordable access to markets. A second geographical problem is the frequency of typhoons hitting the province. Data have shown that areas in Philippines more frequently hit by typhoons also happen to be

the poorest areas. Given the unequal access to resources due to political constraints, this serves to further exacerbate the problem of income inequality. The concentration of economic activities in Philippines' capital Manila is also cited as one of the causes of inequality. In order to reduce income inequality, it is suggested in the same research that Philippines should spread out its industrial activities so as to better provide job opportunities in rural areas, thus closing the gap between rural and urban inequality. Education Another main contributing factor to income inequality in Philippines is the lack of adequate education opportunity in the country. Through the enhancement of skill and knowledge of the underprivileged sections of the society, education play a vital role in stopping the cycle of generations of poverty among the poor due to a lack of skills and ignorance. Rich Filipinos are able to access significantly better educational resources through better funded schools and private tutoring. There is also a substantial number of Filipinos who send their children overseas for education to America, Europe and neighbouring countries such as Singapore. Equal access to good education is the main pathway of upward social mobility among the poor. Due to the absence of high quality universal education in the Philippines, many Filipinos are stuck in poverty trap for generations as they are not equipped for knowledge intensive jobs. Additional research has found that education is significant in determining levels of inequality. The author of the paper also notes several measures taken by the government to target education, like the "Education for All" (EFA) Policy. This policy aims to expand public education, up to at least the level of secondary schools.