Growth Convergence and Spending Efficiency among Filipino Households

Abstract

A growth model is used in the context of Sala-i-Martin’s definition of conditional convergence to assess the household income dynamics in segmented groups at the provincial level in the Philippines. There is a direct relationship between spending efficiency and income growth convergence across income groups. The lower income convergence rate among low income households can be attributed to their relatively less efficient access to the factors of production. The study provides tools in identifying targeted intervention strategies that will facilitate poverty alleviation among the households at the provincial level. The viability of poverty alleviation strategy can be assessed in terms of convergence of the different income groups. Low income groups converging slower than the high income groups support the recent data on measures of inequality in the Philippines (very minimal movement among the indicators). In order to alleviate inequality, the low-income group should be targeted for poverty-alleviating interventions like the conditional cash transfer.