The trade-off between child quantity and child quality and the public provision of education: A case study in rural Terengganu, Malaysia

The objective of this paper is to examine whether the theory of the child quantity-quality (CQQ) trade-off developed by Becker and Lewis (1973) is borne out by the data from a developing country.In brief, the theory states that households behave differently with respect to their mixture of child quantity and child quality depending on their standards of living (i.e. low-income households tend to choose child quantity at the expense of child quality, and the converse is true for high-income households).If the government provides enough support for education, however, this trade-off might be undermined.Using a sample of 885 children from a survey of 2,500 households in rural areas in Terengganu in 2009, we conducted an empirical analysis on the relationship between child quantity and child quality.In the baseline estimation as well as in a series of robustness check, our key findings are that there is a positive yet insignificant impact of child quantity on child quality.Accordingly, we take these results as mild evidence against the CQQ trade-off which, in turn, can be attributed to the magnitude of the public provision of education in Malaysia

The trade-off between child quantity and child quality: An application of the Kremer-Chen model to households in rural Terengganu, Malaysia

The idea of the trade-off between child quantity and child quality has long been documented in economics. In the past, this trade-off has been attributed to the rising marginal cost of child quantity and quality. In recent years, this trade-off has been attributed to a declining direct cost of childrearing and an escalating opportunity cost of childrearing induced by rising household income. Exploiting a micro data set from rural Terengganu, we revisit the idea based on this new postulate.Our goal is to investigate whether a rise in household income has a positive impact on child quality and a negative impact on child quantity. In a series of empirical exercises, we find that household income has a positive impact on both child quantity and child quality.We take these findings as evidence that there is no trade-off between child quantity and child quality among rural households in Terengganu, Malaysia

Fuel subsidy reform in Malaysia: An assessment on the direct welfare impact on consumers

This paper investigates the issue of fuel subsidy reform in Malaysia by analysing the direct welfare impact resulting from fuel subsidy removal.Using the Household Expenditure Survey 2004/2005 with a sample of 4227 households, the analysis is carried out by segregating households into 3 different income groups and the welfare impact due to subsidy cut is measured.The results show that the reduction in welfare due to higher price is larger for the middle 40% compared to the top and the bottom 40%.This is due to the fact that the middle 40% has a larger budget share on fuel.Fuel subsidies are found to be costly in protecting poor households due to substantial leakage of benefits to higher income group but the welfare loss for the lower income group due to subsidy cut is somewhat higher in relative term due to the smaller size of their income. Thus, while subsidy reform is undeniably necessary, our findings suggest that it must be carried out cautiously. Our study suggests that the reform must be accompanied with strategies and programs to mitigate the welfare loss, not only for the lower income but also the middle income group as well

Social capital and educational attainment among rural community in Malaysia

The determinants of educational attainment among children have become one of the main research agenda among scholars, educationists and economists alike.In most studies, the focus is on the relationship between educational attainment and factors such as the quality of teachers, schools, educational technologies, curriculum design, the financial and human capital aspect of the families and the ability of children themselves. Recently, the focus has been expanded to explore the relationship between social capital and educational attainment.As an addition to the existing literature, this paper attempts to investigate the impact of social capital on educational attainment using a regression analysis based on a sample of 2500 households, gathered from a rural community in Terengganu, Malaysia. Six domains of social capital are used to arrive at the index of social capital.The argument advanced in this paper is that social capital, which could be viewed as the outcome of networking, cooperation and trust at the household level, is expected to have a positive impact on a child’s educational attainment.Towards this end, we regress children’s education attainment on social capital along with other relevant independent variables, i.e. family, children, school and neighbourhood characteristics. Interestingly, the result of our study reveals that the level of social capital that a family has, is found to be significant and has the expected positive sign. This finding implies that social capital at the household level appear to be a critical factor in determining a child’s educational attainment. Thus, our finding lends support to the idea that social capital is a good predictor of children’s is educational attainment

Is Malaysia’s Economic Growth Associated with the Creation and Expansion of the Middle Class in Malaysia?

It has been argued in the development literature that a sizeable and stable middle class in the society is imperative to foster economic growth and democracy. The creation and expansion of the middle class will stimulate the demand for better quality consumer goods, induce investment, and hence increase and sustain economic growth. The middle-class is also regarded as an important foundation for the emergence and development of a strong democratic civil society, that will induce the demand not only for better public services, but also for a more effective, accountable and transparent government. Furthermore, a large and expanding middle class will also lessen polarisation between the poor and the rich, reduce social tension and conflict, and hence foster socio-political stability. In this regards, the objective of this paper is therefore to measure the size of the middle-class in Malaysia. Examining the size of the middle class seems plausible since Malaysia aspires to transform her economy not only towards a high income, inclusive, and sustainable economy, but also towards a matured democratic society. Besides, in the last four decades Malaysia has been generally successful in sustaining rapid economic growth. In this regards, the objective of this paper is to examine whether the rapid economic growth in the past decades is associated with the enlargement of the size of the middle class society in Malaysia. Towards this end, we measure the size of the middle class by the percentage of household whose income falls within the range of 25% below to 25% above the median household income. Here, in our analysis we employ data from the Household Expenditure Survey (HES). Our findings show that, quite surprisingly, the middle class in Malaysia is relatively small, constituting only about 30% of the total households, and it is declining, albeit marginally. We conclude that, the middle class is relatively small and it seems that the rapid economic growth is not coupled with the enlargement of the middle class society in Malaysia. Keywords: economic growth, middle class, size of middle class, Malaysi

The Structure of Society

This paper attempts to characterize the structure of society by examining the pattern of household expenditure, consumption, and saving of the lower, middle, and upper classes in Malaysia. The analysis is based on the household data taken from the Household Expenditure Survey of Malaysia in 2009/2010. The paper begins by arguing that the existing definitions of middle class fail to capture its essence as perceived by the society. Using a new definition, we find that the middle class constitutes about 60% of all households in the sample. By contrast, the lower class and upper class constitutes, respectively, 33.5% and 6.5% of all households in the sample. When the analysis is extended to cover the period 1998-2010, we find evidence of the shrinking lower class and the swelling middle class, signifying the presence of social mobility. We also find that the expenditure and consumption shares of income are pro-cyclical and the saving share of income is counter-cyclical for all income classes. When consumption is broken down into several sub-categories, we find that the idea of consumption smoothing appears to be most applicable to the upper class. Keywords: lower class, middle class, upper class, consumption, savin

Consumption and saving: Another glance at the life cycle framework

This paper investigates the behavior of consumption and saving in Malaysia from the perspective of the life cycle hypothesis (LCH). Specifically, the analysis employs the Deaton-Paxson model which decomposes the pattern of household consumption and saving into age effects and cohort effects. Using the household data from three Household Expenditure Surveys of Malaysia, this study produces two key results. First, the age effects of income and consumption rise with age but the latter rise more rapidly; thus, the age effects of saving fallwith age. This set of results suggests that individuals engage in a lifetime saving plan early in their working lives (which is consistent with the prediction of LCH); yet, their saving falls gradually over time and approaches zero (instead of becoming negative) toward the end of their lifetime (inconsistent with the prediction of LCH). Second, the cohort effects of income and consumption fall with cohort but the latter fall more rapidly; hence, the cohort effects of saving rise with cohort. This set of results suggests that economic boom generates an unwarranted optimism in that individuals choose to consume at the expense saving; therefore, growth stimulates consumption instead of saving (inconsistent with the prediction of LCH)

The Structure of Society

This paper attempts to characterize the structure of society by examining the pattern of household expenditure, consumption, and saving of the lower, middle, and upper classes in Malaysia. The analysis is based on the household data taken from the Household Expenditure Survey of Malaysia in 2009/2010. The paper begins by arguing that the existing definitions of middle class fail to capture its essence as perceived by the society. Using a new definition, we find that the middle class constitutes about 60% of all households in the sample. By contrast, the lower class and upper class constitutes, respectively, 33.5% and 6.5% of all households in the sample. When the analysis is extended to cover the period 1998-2010, we find evidence of the shrinking lower class and the swelling middle class, signifying the presence of social mobility. We also find that the expenditure and consumption shares of income are pro-cyclical and the saving share of income is counter-cyclical for all income classes. When consumption is broken down into several sub-categories, we find that the idea of consumption smoothing appears to be most applicable to the upper class. Keywords: lower class, middle class, upper class, consumption, savin

Microcredit, personal empowerment and quality of life of women borrowers – a theoretical framework

The issue of marginalization of women in development, particularly in South Asia, has been highlighted in the development literature. Women in this region are found to be generally poor, lack of education, and have a low quality of life, due to various economic and cultural reasons. Thus, unlocking the potentials of these women appears to be a plausible move as this could improve not only their income, but also their quality of life.One such initiative to unlock the potential of these women is micro credit program, where small loan is given to these women to enable them to embark on economic activities, which consequently improve their household income and quality of life.Indeed, there have been many studies that examine the relationship between micro credit and quality of life, and found that there is a positive relationship between micro credit and quality of life of the borrowers (women). However, most of these studies implicitly assume that the impact of micro credit on quality of life is direct, and hence, did not consider the role of other factors in evaluating the impact of micro credit on quality of life. Here, we argue that, the impact of micro credit on quality of life is not direct, but rather indirect.We believe personal empowerment does play an important role in influencing the impact of micro credit on quality of life.The mere availability of micro credit, in our view, did not guarantee a positive impact on quality of life. Rather, the availability of credit to borrowers affects their personal confidence, which consequently affects their level of quality of life.This paper discusses the theoretical framework by which these variables – microcredit, personal empowerment and quality of life – are inter-related

The quest for Maslow’s self-actualisation need in leadership: a review of happiness in the Nigerian economy

The phrase “making it” or “made it” is a common phenomenon that posits ones money-making status or the wealth one has acquired in Nigerian society. The word is mainly used to describe or applaud people that have amassed wealth in the government leadership roles or used by leadership cohorts to describe their act in the business of embezzlement of public fund. Many politicians and top government officials view corruption, most especially embezzling public wealth for personal use as way of self actualisation, attaining happiness and success in Nigeria.This phenomenon has generated other societal evils that have resulted in a lot of hardship and unhappiness of Nigerian masses and even the few in the leadership positions base on Maslow’s basic needs of life. The work however, aimed at ascertaining Nigeria’s happiness status, discovered that with societal values like religion and pronounced life deprivations, the masses could be said to be happy.Therefore, concludes that justice is an icon to achieving global happiness and recommends removal of immunity provision of the constitution to curb corruption and upgrade happiness status of Nigerians