Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized s- s SS 4 / o%f EPD INCOME DISTRIBUTION PROJECT DATA ON INCOME DISTRIBUTION IN BANGLADESH Satish Kansal Division Working Paper No. 1981-8 July 1981 Economic and Social Data Division Economic Analysis and Projections Departmeut Development Policy Staff The World Bank DRAFT Division Working Papers report on work in progress and are circulated for Bank staff use to stimulate discussion and comment. The views and interpretations in a Working Paper are those of the author and may not be attributed to the World Bank or its affiliated organizations.
- DATA ON INCOME DISTRIBUTION IN BANGLADESH This paper evaluates the 1973-74 Household Expenditure Survey in Bangladesh and the estimates of income distribution derived from it. Based on this evaluation, the survey data were adjusted for biases in sample composition, and a more representative distribution of household income was derived.
-. TABLE OF CONTENTS Page I. Introduction.... 1 II. III. IV. 1973-74 Household Expendituze Survey: A Brief Description... 2 1973-74 Household Expenditure Survey: An Evaluation...... 5 Data Adjustment and the Derivation of Income Distribution......... *.............. 13 V. Comparison with Other Estimates... 20 VI. Concluding Remarks.... 22 References...... 23 Appendix: Tables... 24
DATA ON INCOME DISTRIBUTION IN BANGLADESH I. Introduction Bangladesh emerged as an independent nation in late 1971. The first household survey was conducted in 1973-74 by the Bangladesh Bureau of Statistics and coverted the period July to September 1973. Since then, the household surveys have been conducted regularly on a quarterly basis, separately for rural and urban areas. A published report is available only for 1973-74; it includes the first four quarterly surveys, covering the period July 1973 to June 1974. Prior to 1971, the Central Statistical Office of Pakistan had conducted periodic annual household income and expenditure surveys in both West and East Pakistan (now Bangladesh). However, the latest published report for the eastern section of Pakistan is only for 1966-67. The Bangladesh Bureau of Statistics, in one of its publications,/l estimated household income distribution by deciles of households for 1966-67 and 1968-69, was based. but did not assess the quality of the data on which the estimate Shail Jain also used the 1966-67 survey data to derive income distribution, which was published in S. Jain's Size Distribution of Income (1975). The present study evaluates the 1973-74 Household Expenditure Survey data and then derives income distribution by household and per capita in 1973-74 after making the necessary adjustments so that the distribution estimate could be made for all of Bangladesh. It also broadly compares the 1973-74 household income distribution estimates with those of 1966-67. /1 A. K. M. Ghulam Rabbani and Shadat Hussain, Rural and Urban Consumption Patterns in Contemporary Bangladesh, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, May 1978, pp. 2-6.
-2- II. 1973-74 Household Expenditure Survey: A Brief Description The 1973-74 survey was the first nationwide sample survey of household income and expenditures in Bangladesh after its independence. The annual results were obtained through the sample survey conducted on a quarterly basis by the Bangladesh Bureau of Statistics in rural and urban areas of the country during 1973-74. The objectives of the survey were "to obtain data on household income and expendi.ture to ascertain seasonal variatioi in expenditure patterns," "to provide data for determining weights for computing the consumer price index," "to collect data about the standard of living," "'to collect data for calculating national income by the consumption method," "to collect data related to nutrition analysis," and "to collect data for the calculation of demand function." a. Coverage The survey covered all geographical areas of Bangladesh and all households excluding those located in institutions such as hotels, hostels, boarding houses, etc. The survey also excluded those households which depended entirely on charity for their living. b. Definitions A household consisted of one or more persons, related. or unrelated, who normally lived in the same dwelling and ate together with common cooking arrangements. Thus household members included all persons present or temporarily absent whose usual place of residence at the time of survey was the sample household. Since living and eating together were essential requirements for being counted as household members, a lodger livinig in the household but caking meals outside and a servant taking his meals from
-3- the employer's kitchen but whose usual place of residence was somewhere else were not counted as household members. The concept of household, used in the survey is similar to the de jure approach on which the housekeeping concept of the United Nations' guidelines is based. Household income was defined as the "material return in kind or in cash, in exchange for goods and services, or from gifts, assistance, etc., obtained by the household earners other than boarders, lodgers and servants." For recording purposes; household income was classified into monthly and annual income in cash or in kind. Monthly income included wages and salaries, pensions, contributions made by boarders and lodgers and professional fees, etc.; yearly income included interest, dividends, e.'rnings from agricultural activities, commercial and industrial enterprises, rents from land and property, gifts and assistance, insurance benefits, etc., and other regular receipt:. Imputed income was taken as the estimated value at current market prices of the goods and services received by households for which no cash payment was made. It included home-produced goods consumed by the household, rent from owner-occupied and rent-free houses, gifts and assistance received in kind, free meals supplied by the employer, etc. The survey excluded receipts such as withdrawals from savings and working capital, sales of assets, borrowings, etc. The income concept used in the survey is broadly similar to the total household income concept in the United Nations' guidelines./- It did, however, exclude the incomes of boarders and servants. /l UN, Provisional Guidelines on Statistics of the Distribution of Income Consumption and Accumulation of Households, Series M; No. 61, New York, 1977. *,,,-J-,.-,.,,- - -,--...-:-- --.:w
-4- c. Samp14f Design The whole country was divided into rural and urban areas. For each, an independent two-stage stratified sample design was used. Rural Bangladesh was divided into 60 strata. The sampling frame for the first stage unit was a list of villages with information on location, population and households according to the 1961 census. Eight hundred villages (out of 64,500) were selected with a probability proportional to the population size for the whole year. In each quarter, 200 villages, selected at random, were covered. The second stage sampling frame comprised a list of households prepared within the selected villages at the time of enumeration. The households were selected by systematic sampling from each sampled village using a constant overall sampling fraction of 1/1,190 for all strata. The urban areas of Bangladesh were divided into 19 strata on the basis of the 1961 population. The sampling frame for the first stage sampling unit was the stratum-wise list of electoral units (covering part of a city or a group of towns) designated by the Election Commission for the 1973 elections. The number of electoral units to be sampled was fixed at 216, covering 54 units in each quarter. The second stage sampling frame was constructed in the same way as for the rural areas--by listing all households. in the selected electoral units. Households were selected systematically using a constant overall sampling fraction of 1/356 for all s trata. Data were processed for 9,536 rural households and 2,237 urban households. d. Survey Methodology and Reference Period The survey was conducted between July 1973 and June 1974. Data were collecteu through interviews, with the enumerator filling out the
-5- questionnaire with the help of the head of the household and other household members. The reference period for wages and salaries, pensions, professional fees, etc. was the one month prior to the date of enumeration; for interest, dividends, agricultural incomes, business and commercial incomes, property income, gifts, assistance, etc. it was the previous year. The tabulated data gave average monthly household income during the survey period. III. 1973-74 Household Expenditure Survey: An Evaluation a. Non-Enumeration The report on the survey did not give any data about non-enumeration rates. It only mentioned that data were processed for 9,536 rural and 2,237 urban households. If it is assumed that non-enumeration was zero, it should be possible to work out the total number of households in Bangladesh by using overall sampling fractions and the actual number of sample households for which data were processed in the rural-urban areas. Since the 1973-74 survey period coincided with the 1974 census period (March 1974), the estimate of total number of households based on the survey should be quite close to the census figures for the total number of households./- Table 1 gives the total -number of households in rural and urban areas of Bangladesh based on the census and survey data. For rural areas, the survey estimate was quite close to the census estimate of total number of households (about 98%). However, for urban areas the survey figure was only 74 percent of the census figure. Apart from sampling errors, non-enumeration might be the main reason for such a big difference in the two estimates of urban households. /1 Bangladesh Population Census, 1974, Bulletin No. 3, Union Population Statistics, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, April 1976.
-6- Table 1: ESTIMATED NUMBER OF TOTAL HOUSEHOLDS, BANGLADESH, 1973-74 Unit Rural Urban 1. Sample households (number) 9,536 2,237 2. Overall sampling fraction - 1/1190 1/356 3.. Survey estimate of-total households - (thousand (1 divided by 2) numbers) 11,348 796 4. Census estimate of total households " 11,601 1,075 5. Survey es.timate of-total households expressed as % of census households (%) 97.8 74.0 b. Bias in the Sample Composition The survey report gave the distribution of sample households by size of households in great detail. Similar detailed information regarding the distribution of households by size was not available from the census data. However, the housing census undertaken in 1973 does give the distribution of households by one- and two-person households; this can reasonably be compared with the survey data (Table 2). Table 2: PERCENTAGE DISTRIBUTION OF HOUSEHOLDS BY SIZE OF HOUSEHOLD Rural /a Urban /a Survey Centsus- Survey Census- 1-person household 1.56 2.80 2.59 5.50 2-person household 6.92 8.50 4.65 7.90 3-or more person household 91.52 88.70 92.76 86.60 All households 100.00 100.00 100.00 100.00 /a Derived from 1979 Statistical 'Fearbook of Bangladesh, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, April 1979, p. 108.
-7- The above comparison suggests that one- and two-person households The under-representation of small-size households was relatively higher in urban areas. This might be the result of a large non-response rate in urban areas, where there are more small-size households, which are more prone to non-response as compared with large-size households. Similar data on the distribution of households by size were available for Pakistan for 1970-71. Remembering that both Pakistan and Bangladesh are Moslem countries, it was expected that the distribution of households by size should be similar in both. However, the comparison of the Bangladesh survey data and the Pakistan data shows that large-size households (especially 10 or more person households) had a much higher weight in Bangladesh than in Pakistan (Table 3). Table 3: PERCENTAGE DISTRIBUTION OF HOUSEHOLDS BY SIZE Household Rural a Urban size Bangladesh Pakistar Bangladesh Pakistan 1 1.6 2.1 2.6 3.8 2 6.9 9.9 4.6 8.9 3 12.0 14.0 8.6 11.5 4.15.1 16.7 11.7 13.8 5 16.3 16.9 14.4 15.6 6 14.8 14.0 14.0 14.0 7 11.8 10.3-12.4 10.7 8 8.0 6.7 9.6 8.7 9 4.4 4.5 6.3 5.7 10 or more 9.1 4.9 15.8 7.3 All households 100.0 100.0 100.0 100.0 4 /a Taken from housenoia-<ncome ana :xpenciture Survey 17u-71, Statistics D-.i sf - - - - were under-represented in the survey, while large size households were overrepresented..-f-
-8- The above comparison reinforces the suspicion thal the sample composition of the 1973-74 survey was biased toward large-size households. And since average household income increased with an increase in hcusehold size (see Appendix Tables A-1 and 2), the survey estimate of average household income for all households was likely to be overestimated in both the rural and urban areas of Bangladesh. The 1973-74 survey report gave household income distribution for rural and urban areas separately. It also gave combined household income distribution, which had been derived by taking the weighted average of rural and urban distributions, the weights being the survey-based proportions of total households in the two areas. According to the survey data, the ratio for the distribution of urban-rural households was 6.6 to 93.4, as compared to the census ratio of 8.5 to 91.5. Thus in the survey report, the combined income distribution was worked out by attaching a higher weight to rural areas, creating a bias toward rural income distribution. In summary, the bias in the sample composition affected the survey results in two ways. First, the sample over-;represented large-size households; average household income was therefore overestimated. Second, in the survey the weight of urban households (which had a higher average income than rural households) was smaller; hence, the average household income for all of Bangladesh was underestimated. Thus the two biases worked in opposite directions. However, the net effect appears to be an overestimation of average household income by about 5.4 percent (see Section IV). c. Consistency of the Survey Data on Income and Expenditures The survey report gave data on average household income and consumption expenditures by different income classes. Consumption expenditures exceeded
- I -9- income for all income classes except the highest one (Table A-3). This result confirms the general belief that respondents normally under-report income. However, there is reason to suspect that the consumption expenditures in the survey were overestimated. In part this might be due to an overestimation of the imputed value of home-grown consumption and the imputed rent of owner-occupied and rent-free houses in the higher expenditure group households, which were evaluated at the current market prices./- It is expected that the proportion of househgld (or percapita) expenditures for food should decline along with an increase in total household (or per capita) expenditures. However, the survey data did not show any such decline, although total household expenditures increased manyfold (Table 4). For example, average monthly household expenditures increased from 38 Taka in the lowest expenditure class to 1706 Taka in the second highest expenditure class, but the share of expenditures for food did not decline, remaining at around 74 percent. In fact, it continued to increase in most of the expenditure classes. As an independent check on the overall magnitude of total housohold income, the survey-based estimate of total household income was compared with a similar aggregate derived from the national accounts data. A review of the national accounts data revealed that data were scanty, and it was not possible to derive precise estimates of total household income from the national accounts statistics. However, tentative estimates of total household income, derived indirectly by adding private consumption and private savings, worked out at around 69.0 billion Taka in 1973-74 (Table 5). /1 In view of the non-availability of a standard rate of evaluation at current market prices, especially in rural areas, the problem of imputation of receipts in kind and home-grown consumption was mentioned in the survey report itself.
- 10 - Table 4: SHARE OF FOOD EXPENDITURES IN TOTAL EXPENDITURES BY EXPENDITURE CLASSES, BANGLADESH, 1973-74 Average expenditure per Household expenditure Household Person Percentage of class (Taka) (Taka) (Taka) expenditures on food Less than 50 38.4 15.1 71.8 50-99 82.7 29.6 70.8 100-149 127.1 37.7 73.1 150-199 175.6 45.5 74.7 200-249 224.5 53.2 75.3 250-299 273.1 58.0 76.0 300-399. 347.4 66.2 76.0 400-499 446.9 74.7 75.5 500-749 604.6 88.0 75.3 250-999 857.2 104.2 74.3 1,000 - l1499 1,186.0 118.8 72.3 1,500-1,999 1,705.71 156.3 73.8' 2,000 - above - '3,728.6 345.2 68.6 Alt classes.. 500-.6. 85..9 74.2 Source: A Report on the Household Ex=enditure Survey of Bangladesh, 1973-74, Volume II, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, December 1980.
Table 5: ESTIMATION OF HOUSEHOLD INCOME IN BANGLADESH, 1973-74 1973-74 (Taka millions) 1. Gross Domestic Product at market prices 71,086 2. Imports of goods and services 7,320 3. Exports of goods and services 2,983 4. Gross investment 7,570 5. Government consumption expenditures on goods and services.2,555 6. Private consumption expenditure-/a 65,298 7. Domestic savings (1-5-6) 3,233 a) Government saving b on current accounts -486 b) Corporate savings- n.a. c) Household savings 3,719 8. Household income (6 +7c) 69,017 /a Inclusive of the consumption expenditures of non-profit private institutions. /b Corporate savings were likely to be very small, as corporate taxes on income were only 9 million Taka in 1973-74. Sources: 1979 Statistical Yearbook of Bangladesh, Bangladesh Bureau of Statistics, Ministry of Planning, Dacca, April 1979. Bangladesh: Current Economic Situation and Review of the Second Plan, Volume I, World Bank, ReDort No. 3309-BD, Washington, D.C., February 23, 1981.
- 12 - As compared to the national accounts-based estimate of 69.0 billion Taka, the survey estimate of total household income of about 72.7 billion Taka was about 5 percent higher. Normally,, a survey estimate of household income is lower than a similar estimate derived from the national accounts, as there is general tendency on-the part of respondents to under-report income. However, in the case of the Bangladesh household survey, the sample was biased toward large-size households (with larger household income); thus average household income was over-estimated. If the sample is adjusted for the biases in the sample composition, total household income works cut to 68.8 billion Taka, which is quite close to the national accounts- estimate (Table 6). Table 6: SURVEY ESTIMATE OF TOTAL HOUSEHOLD INCONE Unit. Rural Urban Total 1. Average annual household income Taka 5,565 7,555-2. Number of households thous. 11,601 1,075 12,676 3. Total household income mil Taka 64,560 8,122 72,682 4. Adjusted annual household income-/ Taka 5,292 6,900-5. Adjusted total household inco /1 mil Taka 61,392 7,418 68,810 /1 Adjusted for the bias in the sample composition. The revised estimate of average household income is derived by making adjustments for the bias in the sample composition resulting from the underrepresentation of one- and two-person households and for the bias toward rural households. There might still be an over-estimate if the three- or four-person
- 13 - households were also under-represented in the sample. However, there is no comparable census data. On the other hand, household income might be under-estimated, as survey respondents normally under-report income. Since the above two factors.work in opposite,directions, the adjusted figure for average household income should reasonably reflect the prevailing level of average household income in 1973-74. IV. Data Adjustment and the Derivation of Income Distribution Table 2 showed that the proportions of one- and two-person households in the sample were lower than in the census. Thus the sample proportions for one- and two-person households were increased to the census levels, the latter being 2.8 percent and 8.5 percent respectively for rural areas and 5.5 percent and 7.9 percent respectively for urban areas. Since "ten or more person" households were over-represented in the sample (see Table 3), they were reduced from 9.1 percent to 6.3 percent in rural areas and from 15.8 percent to 9.6 percent in urban areas. Table 7 gives the adjusted distribution of households and average monthly househo,ld income by size of household. Using the adjusted distribution of households by size and the corresponding average monthly household incomes, the adjusted overall average monthly household incomes were derived. They were 441 Taka for rural areas (5,292 Taka yearly) and 575 Taka for urban areas (6,900 Taka yearly). From these, total household income worked out to 68.8 billion Taka, very close to the 69.0 billion Taka derived from the national accounts (see Table 6). The adjusted number of sample households in each household size group were distributed among various income classes in the same proportion as was observed in the original sample. Finally, the adjusted distributions
- 14 - Table 7: ADJUSTED DISTRIBUTION OF HOUSEHOLDS AND AVERAGE HOUSEHOLD INCOME BY HOUSEHOLD SIZE - Rural Urban Average Average - monthly monthly Household size % of household % of household households income households income (Taka) (Taka) One 2.8 184 5.5 252 TWO 8.5 223 7.9 305 Three 12.0 285 8.6 342 Four 15.1 333 11.7 421 Five 16.3 393 14.4 489 Six 14.8 446 14.0 555 Seven 11.8 525 12.4 630 Eight 8.0 577 9.6 666 Nine 4.4 710 6.3 866 Ten or more 6.3 1,004 9.6 1,180 All households 100.0 441 100.0 575 No. of sample households 9,536-2,237 - Source: Derived from Tables A-1 and A-2 after adjusting for the bias in the sample composition.
- 15 - of households and income were obtained by aggregating revised sample households and their income shares over the household size groups for each income class, separately for rural and urban areas. The combined household income distribution for all of Bangladesh was derived by-aggregating the-rural and-urban- income distributions, using the total number of census households in the two areas as weights. Table 8 gives the adjusted household income distributions for rural, urban and all-bangladesh by houshold income levels. lncnme inequality, as measured by the Gini ratio, was 0.358 for- the whole country. It was slightly higher in urban areas (0.379) than in rural areas (0.354). Table 9 gives the distribution of income by deciles.of households. The income shares of the lowest 20 percent of households were 6.9 percent in rural areas and 6.7 percent in urban areas; for the top 10 percent of households, the income shares were 27.1 percent for rural areas and 29.3 percent for urban areas. It is interesting to note that the level of income inequality in Bangladesh is considerably lower than in other developing countries in the region (Appendix Table A-5). The estimates of household income distributions as shown in Tables 8 and 9 did not take into account the effects of household size on the pattern of-income distribution. To eliminate such effects, households (and household members) were reclassified according to per capita income. Appendix Tables A-l and A-2 provided the distribution of sample households by household size for each income class. They also provided average per capita income for different household size groups, computed by dividing the average household income with the different sizes of hiouseholds. The distribution of household members according to per capita income was derived
- 16 - Table 8 : HOUSEHOLD INCObE DISTRIBUTION, ADJUSTED, 1973-74 Monthly household Rural Urban Combined income class Households Income Households Income Households Income (Taka) ()( ) ( ( ( up to 50 0.19 0.01 - - 0.17 0.01 50-99 2.15 0.39 0.98 0.13 2.05 0.36 100-149 6.29 1.80 2.64 0.59 5.98 1.67 150-199 9.62 3.79 5.54 1.67 9.27 3.57 200-249 11.07 5.63 9.12 3.53 10.91 5.40 250-299 10.35 6.41 9.25 4.35 10.26 6.18 300-399 17.69 13.88 17.30 10.35 17.66 13.50 400-499 12.78 12.89 13.14 10.17 12.81 12.60 500-749 18.19 24.87 20.70 21.78 18.40 24.54 750-999 6.26 12.22 8.99 13.32 6.49 12.34 1,000-1,499 4.12 11.15 8.23 16.98 4.47 11.77 1,500-1,999 0.71 2.74 2.23 6.54 0.84 3.15 2,000 & above 0.58 4.22 1.88 10.59 0.69 4.91 All classes 100.00 100.00 100.00 100.00 100.00 100.00 Gini ratio 0.354 0.379 0.358 Source: Derived from Appendix Table A-4 after adjusting for bias in sample composition. J
- 17 - Table 9: HOUSEHOLD INCOE DISTRIBUTION BY DECILES, ADJUSTED, 1973-74 Cumulative Cumulative share of income deciles of Rural Urban Combined households 10 2.74 2.71 2.73 20 6.88 6.73 6.86 30 12.04 11.75 11.99 40 18.29 17.73 18.23 50 26.14 24.62 25.87 60 34.57 32.93 34.33 70 44.66 43.45 44.48 80 58.28 54.54 57.81 90 72.92 70.72 72.56 100 100.00 100.00 100;.00 Source: Derived from Table 8. by reclassifying the household members in different per capita income classes (Table A-6). Per capita income distribution was adjusted for biases in the sample composition in the same way as was done for household income distribution. The adjusted per capita income distribution was then derived (Table 10). Income distribution by deciles of population show that the income share of the lowest 20 percent of population was about 8.9 percent in rural areas and 8.6 percent in urban areas (Table 11). For the top 10 percent of the population, income shares in the rural and urban areas were 22.7 percent and 25.3 percent respectively.
-18 - Tablel0: PER CAPITA INCOME DISTRIBUTION BY HOUSEHOLD MEMBERS, ADJUSTED, 1973-4 Monthly per capita Rural Urban Combined income class Popuiiltio&- Iicome- Population Income Population Income CTaka) (M) (%) (M) (%) (x) below 25-2.58-0.65 2.00 0.40 2.42 0.58 25-34 6.79 2.60 3.53 1.13 5.87 2.18 35-44 9.77 5.05 7.51 3.16 9.13 4.51 45-54 10.28 6.51 8.58 4.82 9.80 6.03 55-64 12.10 8.84 9.44 5.61 11.35 7.93 65-74 14.88 13.18 10.37 7.34 13.60 11.53 75-89 14.15 14.72 16.45 13.65 14.80 14.41 90-104 10.31 12.32 12.28 12.09 10.87 12.26 105-119 4.70 6.50 4.54 5.06 4.65 6.09 120-139 6.09 9.46 8.50 10.72 6.77 9.82 140-159 3.36 6.20 4.87 7.26 3.79 6.50 160-199 2.28 5.05 4.26 7.70 2.84 5.80 200-249 2.03 5.37 5.42 12.08 2.99 7.27 250 & above 0.68 3.55 2.25 8.98 1.12 5.09 All classes 100.00 100.00 100.00 100.00 100.00 100.00 Gini ratio 0.280 0.310 0.284 Source: Derived from Appendix Table A-6 after adjusting for the bias in the sample composition.
- 19 - Table 11: INCOME DISTRIBUTION BY DECILES OF POPULATION ADJUSTED, 1973-74 Cumulative Cumulative shares of income deciles of Rural Urban Combined population 10 3.58 3.41 3.60 20 8.84 8 60 8.86 30 15.23 14.49 15.24 40 22.54 21.45 22.44 50 31.16 29.57 30.92 60 40.57 38.20 40.38 70 50.97 48.04 50.58 80 62.84 59.94 62.26 90 77.27 74.73 76.61 100 100.00 100.00 100.00 Source: Derived from Table 10. A comparison of household and per capita income distributions shows that the income inequality was less on a per capita basis than on a household basis. A similar trend was noted in the income shares of the bottom 20 percent and top 10 percent of population, indicating less income inequality in per capita income distribution than in household income distribution (Tab.le 121. Table 12: INCOME INEQUALITY MEASURES FOR HOUSEHOLD AND PER CAPITA INCOME DISTRIBUTIONS, 1973-74 Household Population Share of lowest 20% 6.9 8.9 Share of top 10% 27.4 23.4 Gini ratio 0.36 0.28
- 20 - It is difficult. to explain the lower income inequality in per capita income distribution as compared to household income distribution. Presumably it decreased, mainly for the following reason. The average size of households increased -with an increase in household income, and the lower deciles of households, which accounted for a smaller share of income, included a smaller percentage of the population, whereas the higher deciles of households included a larger percentage of the population. However, part of the effect might have been cancelled out as some of the households changed their positions when reclassified by per capita income. The per capita income distribution confirms the low degree of income inequality in Bangladesh as compared with other developing countries. V. Comparison with Other Estimates The-World-Bank- Social- Indicator Data Sheets-give some data on household income distribution in Bangladesh for the year 1966-67. They were taken from Shail Jain's compilation of the size distribution of income, which in turn, as noted, was based on the 1966-67 Survey of Household Income and Expenditure undertaken by the Central Statistical Office of Pakistan.-/ We reviewed the 1966-67 survey report and found it reasonably comparable with the 1973-74 survey results in terms of concepts, definitions, and coverage. In fact, the 1966-67 survey had a more representative coverage of small-size households than the 1973-74 survey. In both surveys, households were classified by similar household iricome classes, so that two income distributions were fairly comparable (Appendix Table A-7). Table 13 gives the inequality measures for the 1966-67 and 1973-74 household income distributions for the whole country. /1 Report on the Quarterly Survey of Current Economic Conditions in Pakistan (Household Income and Expenditure,Jl 1966 to June I97,Central Statis-
-21- Table 13: HOUSEHOLD INCONE INEQUALITY MEASURES, BANGLADESH, 1966-67 AND 1973-74 Gini Income share in % coefficient Top 10% Lowest 20% Lowest 40% households households households 1. 1973-74 Survey 0.36 27.4 6.9 18.2 /a 2. 1966-67 Survey- Jain's estimate 0.34 26.7 7.9 19.6 Rabbani's/b 0.34 29.5 8.7 19.6 estimate /a Jain's figures are slightly different than Rabbani's figures, as the former were derived by fitting a Lorenz curve to the observed data. /b Taken from Rural and Urban Consumption Patterns in Contemporary Bangladesh, by A. K. M. Ghulam Rabbani and Shadat Hussain, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, May 1978, pp. 2-6. Table 13 shows a slight increase in income inequality from 1966-67 to l973-4. However, in the 1966-67 survey report, about 60 percent of the sample households were grouped in only two classes, and the summary inequality measure3 as calculated from these data would be subject to a wider margin of error. In such a case, income inequality is normally under-estimated. Thus, we feel that the income distributions in the two periods were not very dif- /1 ferent.- The 1966-67 survey also confirmed the low degree of income in-- equality in Bangladesh. /1 Shail Jain also gave per capita income distribution for Bangladesh. It, however, is not comparable with our per capita income distribution, as she classified household members by household income levels instead of by per capita income levels.
- 22 - VT.- Concluding Remarks. We derived the distribution of income by-househoid in E1langladesh for the period July 1973 td June 1974, yt,ing'data from the country's fi.rst nati6oal household survey. We also derived per capita distribution by reclassifying household members in the per capita income classes. The income in the survey referred to total household income before the deduction of direct taxes. However, the distribution of before-tax income and that of after-tax income should not differ very much, as the direct tax base is very small-in Bangladesh. We compared our estimate of household income distribution with other estimates for 1966-67. All confirm the low degree of income inequality in Bangladesh. The pattern of income distribution did not show any significant change in the two-periods (1966-67 and 1973-74), and income inequality remained more or less unchanged. The survey data suffered from both high non-response rates and biases in the sample compositions. concepts and definitions. Still, the survey was national and used sound It provided a reasonably good data base for deriving estimates of income distribution after making the necessary adjustments. J
- 23 - REFERENCES 1. A Report on the Household Expenditure Survey of Bangladesh, 1973-74, Volume I, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, August 1978. 2. A Report on the Household Expenditure Survey of Bangladesh, 1973-74, Volume II, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, December 1980. 3. Rabbani, A. K. M. Ghulam, and, Shadat Hussain, Rural and Urban Consumption Patterns in Contemporary Bangladesh, Bangladash Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, May 1978. 4. JN, Provisional Guidelines on Statistics of the Distribution of Income, Consumption and Accumulation of Households, Series M, No. 61, New York, 1977. 5. Bangladesh Population Census: 1974, Bulletin No. 3, Union Population Statistics, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, April 1976. 6. 1979 Statistical Yearbook of Bangladesh, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, April 1979. 7. Household Income and Expenditure Survey, 1970-71, Statistics Division, Ministry of Finance, Government of Pakistan, May 1973. 8. Ban&ladesh: Current Economic Situation and Review of the Second Plan, Volume I, World Bank, Report No. 3309-BD, February 23, 1981. 9. Report on the Quarterly Survey of Current Economic Conditions in Pakistan (Household Income and Expendit.ure), July 1966 to June 1967, Central Statistical Office, Pakistan, Karachi 1968. 10. Jain Shail, Size Distribution of Income: A compilation of Data, The World Bank, Washington, 1975.
Table A-1: DISTRIBUTION OF SAHPLE IHOUSEIIOLDS BY tmontihly IIOUSEIHOLD INCOME AND HOUSEHOLD SIZE, RURAL BANGLADESH, 1973-74 Honthly Average Number household household of Size of household income class income householde One Two Three Four Five Six Seven Eight Nine Ten or more (Taka) (Taka) Less than 50 29.95 12 a 29.95 14.98 9.98 7.49 -- -- -- -- i-- -- b 6 3 1 2 -- -- -- -- r-- -- 50-99 79.85 164 a 79.85 39.93 26.62 19.96 15.97 13.3'. 11.41 9.98 -- 6.88 b 42 41 30 21 10 11 5 2 2 100-149 126.49 537 a 126.49 63.25 42.16 31.62 25.30 21.08 18.07 15.81 j14.05 16.20 b 41 136 132 101 74 26 15 9 2 1 150-199 174.20 868 a 174.20 37.10 58.07 43.55 34.84 29.03 24.89 21.78 19.36 11.69 b 22 144 211 186 142 85 53 15 7 3 200-249 224.41 1,016 a 224.41 112.20 7h.80 56.10 44.88 37.40 32.06 28.05, 24.93 22.67 b 15 137 219 239 183 124. 50 33 5 11 250-299 273.19 971 a 273.19 136.60 91.06 68.30 54.64 45.53 39.03 34.15 30.35 25.06 b 4 76 174 215 208 150 77 40 j5 12 300-399 346.31 1,673 a 346.31 173.16 115.44 86.58 69.26 57.72. 49.47 43.29 k3p.48 30.65 b 7 88 191 304 356 333 208 104 i'43 39 400-499 445.24 1,228 a 445.24 222.62 148.41 111.31 89.05 74.21 63.61 55.66 *49.47 40.85 > b 6 19 100 180 248 247 196 130 142 60 a 500-749 603.74 1,791 a 603.74 301.87 201.25 150.94 120.75 100.62 86.25 75.47 67.08 53.43 b 4 12 66 158 257 327 344 264 154 205 750-999 861.77 659 a -- 430.89 287.26 215.44 172.35 143.63 123.11 107.72.95.75 74.29 b -- 2 9 26 51 67 106 104 92 202 1,000-1,499 1,193.88 464 a 1,193.88 596.94 397.96 298.47 238.78 198.98 170.55 149.24 i32.65 93.27 b 1 2 5 11 16 38 55 53 *47 236 1,500-1,999 1,694.89 83 a 1,t6A4.89 -- 564.96 423.72 338.98 282.48 242.13 211.86 188.32 126.48 b 1 -- 3 1 6 3 3 6 '8 52 2,000 aud above 3,232.59 70 a -- -- 1,077.53 808.15 646.52 538.77 461.80 -- 359.18 209.91 b 1 1 5 4 4 -- 5 50 All clas6es 463.73 9,536 a 183.96 111.70 94.90 83.14 78.54' 74.40 74.99 72.14 78.94 82.94 b 149 660 1,142 1,445 1,556 1,415 1,116 760 420 873 Average hiousehold 463.73-183.96 223.41 284.69 332.57 392.70 446.37 524.91 577.10 710,42 1,003.60 0 Income ote: 'a' denotes average monthly per capita Income in Taka. 'b' denotes number of sample househiolds. ource: A Report on the lhousehold Expenditure Survey of Bangladesh, 1973-74, Volume I, Bangladesh Bureau of Statistics, Statistics Division, Hinistry of Planning, Dacca, August 1978. 4L.
Table A-2: DISTRIBUTION OF SAMPLE HOUSEHOLDS BY tiontiily IhOUSEHiOLD INCOtME AND hiouseiiold SIZE. URBAN BANGLADESII, 1973-74 Monthly Average Number househiold hiousehold of Size of houselhold income class income houselholds One Two Three Four Five Six Seven Eight Nine Ten or more (Taka) Less than 50 --- a - b -- -- -- -- -- -- -- -- -- -- 50 99 77.90 15 a 77.90 38.95 25.97 19.48 15.58 12.99 -- -- -- 7.79 b 5 2 2 1 1 3 -- -- -- 1 100-149 127.72 43 a 127.72 63.86 42.57 31.93 25.54 21.29 18.25 -- 14.19 -- b 6 13 15 3 2 2 1 -- 1 -- 150-199 172.67 107 a 172.67 86.33 57.56 43.17 34.53 28.78 24.67 21.58 19.19 13.93 b 8 13 24 23 19 8 5 4 1 2 i200-249 222.42 175 a 222.42 111.21 74.14 55.61 44.48 37.07 31.77 27.80 24.71 18.23 b 12 26 29 36 29 18 9 6 4 6 250-299 270.01 181 a 270.01 135.00 90.00 67.50 54.00 45.00 38.57 33.75 30.00 24.33 b 17 13 26 28 40 24 14 9 6 4 300-399 343.72 372 a 343.72 171.86 114.57 85.93 68.74 57.29 49.10 42.97 38.19 33.37 a ; b 5 18 45 71 76 60 47 34 7 9 400-499 444.86 291 a 444.86 222.43 148.29 111.22 88.97 74.14 63.55 55.61 49.43 41.97 b 3 12 22 34 46 58 47 35 11 23 500-749 604.82 483 a 604.82 302.41 201.61 151.21 120.96 100.80 86.40 75.6Q 67.20 53.05 b 1 6 23 44 65 84 86 63 47 64 750-999 852.28 228 a -- -- 284.09 213.07 170.46 142.05 121.75 106.54 94.70 76.78 b -- -- 5 10 24 32 35 29 24 69 1.000-1.499 1,186.68 224 a 1,186.68 -- 395.56 296.67 237.34 197.78 169.53 148.34 131.85 96.48 b 1 -- 1 9 14 19 23 25 26 106 1,500-1,999 1,682.21 62 a -- -- 560.74 420.55 336.44 280.37 240.32 210.28 186.91 123.69 b -- -- 1 3 2 3 7 7 9 30 2,000 and above 3,242.71 56 a -- 1,621.36 -- -- 648.54 540.45 463.24 405.34 360.30 219.10 b -- 1 -- -- 3 3 3 2 5 39 All classes 629.59 2,237 a 252.43 152.65 113.96 105.34 97.77 92.45 89.98 83.21 96.19 97.49 b 58 104 193 262 321 314 277 214 140 353 *Average household 629.59 -- 252.43 305.30 341.87 421.34 488.86 554.71 629.88 665.70 865.70 1,179.60 Note: 'a' denotes average monthly per capita income in Taka. 'b' denotes number of sample households. Source. Same as In Table A-1. 4.
APPENDIX: TABLES - 26 - Table A-3: MONTHLY HOUSEHOLD INCOME AND EXPENDITURES BY HOUSEHOLD INCOME LEVELS, BANGLADESH, 1973-74 Household Average monthly Ratio income class Income (y) Expenditure (c) y/c (Taka) (Taka) (Taka) Lass than 50 29.95 58.92 0.51 50-99 79.80 128.56 0.62 100-149 126.52 159.43 0.79 150-199 174.14 196.83 0.88 200-249 224.31 259.81 0.86 250-299 273.02 294.96 0.93 300-399 346.15 365.71 0.95 400-499 445.21 483.09 0.92 500-749 603.82 635.90 0.95 750-999 860.88 902.72 0.95 1000-1499 1192.97 1242.11 0.96 1500-1999 1692.58 1952.87 0.87 2000 and above 3234.55 2519.44 1.28 All classes 474.60 501.57 0.95 Source: Same as in Table A-1.
- 27 - APPENDIX: TABLES Table A-4: HOUSEHOLD INCOME DISTRIBUTION, UNADJT1TSTTEn, 1973-74 Monthly household Rural Urban Combined income class Households Income Households Income Households Income (.Taka) (%) (%) (%) (%) (%) (%) Less than 50 0.13 0.01 0.00 0.00 0.12 0.01 50-99 1.72 0.30 0.68 0.09 1.65 0.28 100-149 5.63 1.54 1.93 0.39 5.39 1.44 150-199 9.10 3.42 4.78 1.31 8.82 3.24 200-249 10.65 5.16 7.82 2.76 10.47 4.95 250-299 10.18 6.00 8.09 3.47 10.05 5.78 300-399 17.54 13.10 16.63 9.08 17.47 12.75 400-499 12.88 12.36 13.01 9.19 12.89 12.09 500-749 18.79 24.44 21.59 20.74 18.96 24.12 750-999 6.91 18.84 10.19 13.80 7.13 12.92 1,000-1,999 0.87 3.18 2.77 7.41 1.00 3.55 2,000 & above 0.73 5.12 2.50 12.89 0.85 5.79 All classes 100.00 100.00 100.00 100.00 100.00 100.00 Gini ratio 0.358 0.384 0.362 Source: A Report on the Household Expenditure Survey of Bangladesh, 1973-74, Volume I, Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Dacca, August 1978. ),
APPENDIX: TABLES Table A-5: HOUSEHOLD INCOME INEQUALITY MEASURES IN SELECTED COUNTRIES Gini Income share in % Country Year coefficient Lowest Lowest Top 20% households 40% households 10% households Bangladesh /a 1973-74 0.36 6.9 18.2 27.4 India /a 1975-76 0.42 7.0 16.2 33.6 Nepal /a 1976-77 0.53 4.6 12.6 46.5 Indonesia/- 1976-0.44 6.6 14.4 34.0 Philippines/a 1970-71 0.47 5.2 14.2 38.5 Malaysia/b 1970 0.50 3.3 10.6 39.6 Sri Lanka /b 1969-70 0.36 7.5 19.2 28.2 /a Obtained from the EPD Income Distribution Project, Division Working Papers, The World Bank, Washington, D.C. /b Obtained from World Development Report, 1980, The World Bank, Washington, D.C., August 1980, pp. 156-157., s.
APPENDIX: TABLES -29- TableA-6: PER CAPITA INCOME DISTRIBUTION BY HOUSEHOLD MEMBERS, UNADJUSTED, 1973-74 Monthly per capita Rural Urban Combined income class Population Income Population Income Population Income (in Taka) (%) (x) (%) (%) (%) (%) Below 25 2.54 0.64 2.19 0.45 2.44 0.59 25-34 6.76 2.59 3.44 1.13 5.82 2.18 35-44 9.59 4.97 7.35 3.17 8.96 4.46 45-54 11.04 7.06 10.30 5.47 10.83 6.61 55-64 11.37 8.32 8.31 5.03 10.50 7.39 65-74 15.42 13.75 9.26 6.70 13.68 11.75 75-89 13.24 13.82 16.58 13.95 14.19 13.86 90-104 11.48 13.70 14.42 14.49 12.31 13.92 105-119 4.35 6.03 3.81 4.34 4.20 5.55 120-139 6.05 9.43 8.53 10.99 6.75 9.87 140-159 3.19 5.90 4.35 6.63 3.52 6.11 160-199 2.06 4.59 3.57 6.60 2.48 5.16 200-249 2.31 6.11 6.15 13.99 3.40 8.34 250 & above 0.60 3.09 1.74 7.06 0.92 4.21 All classes 100.00 100.00 100.00 100.00 100.00 100.00 Gini ratio 0.277 0.307 0.282 Source: Derived from Appendix Tables A-1 and A-2...
APPENDIX: TABLES -30- Table A-7: PERCENTAGE DISTRIBUTION OF HOUSEHOLDS AND INCOME BY HOUSEHOLD INCOME CLASS, 1966-67, EAST PAKISTAN, BANGLADESH Monthly Rural Urban Combined household income Households Income Households Income Households Income class (Rupees) % % % % % % Less than 50 2.8 0.8 0.9 0.2 2.7 0.7 50-99 35.0 17.9 18.2 6.6 34.3 17.2 100-149 25.9 21.1 27.2 14.9 26.0 20.7 150-199 15.6 17.8 16.6 12.7 15.7 17.5 200-249 8.9 13.1 10r7 10.6 8.9 12.9 250-299 5.1 9.2 7.2 8.7 5.2 9.2 300-399 3.7 8.5 8.7 13.1 3.9 8.8 400-499 1.4 4.0 4.0 7.9 1.5 4.4 500-749 1.2 4.9 3.5 8.8 1.3 5.1 750-999 0.2 1.2 1.2 4.8 0.3 1.4 1000-1499 0.2 1.5 1.3 6.7 0.2 1.8 1500-1999 0.0 0.0 0.3 2.3 0.0 0.1 2000 and above 0.0-0.0 0.2 2.7 0.0 0.2 All classes 100.0 100.0 100.0 100.0 100.0 100.0 Source: A Revort on the Ouarterly Survey of Current Economic Conditions in.,pakistan (Household Income and Expenditure), July 1966 to June 1967, Central Statistical Office, Pakistan, Karachi, 1968, pp. 100-102. J ',D0