The Department of Development Studies
& Centre for Poverty and Development Studies
University of Malaya, Kuala Lumpur
has inequality in Malaysia really gone down?
University of Malaya
Muhammed Abdul Khalid
Khazanah Research Institute
5 November 2014
3:00 – 4:30pm
Conference Room (3rd Floor)
Postgraduate Building (Block H12)
Faculty of Economics & Administration
University of Malaya
This paper investigates economic inequality in Malaysia, which poses a puzzle in recent years. While official figures indicate declining household income inequality in the past decade, public discourse and popular perception maintain that inequality has risen, or at least stayed persistently high. Surveying public and policy discourses on inequality, we observe that perceptions of rising inequality plausibly derive from concerns over cost of living and economic exclusion, and discontent toward wealth accumulation by the upper classes. Due to inaccessibility of the Household Income Survey (HIS), the database for official inequality estimates, we assemble data from a range of sources besides the HIS to compute earnings and wealth inequality patterns over time. We obtain evidence of steadily rising earnings inequality in both private and public sectors in the 2000s. Private sector wage inequality has grown, especially at the uppermost segments, while the ranks of managers and professionals have expanded disproportionately faster in the public sector. Passenger vehicle sales data show increasing proportions of luxury cars. Property sales also show rising concentration in the upper rungs. Distribution in the largest unit trust funds offer glimpses at financial wealth, and show varying trends depending on individual funds, and particularly their maturity. Inequality tends to grow over time, but increases in inequality are driven not by concentration in the top decile, but increasing shares of the second highest decile. Overall, our findings are consistent with general perceptions of rising personal inequality, while also highlighting how inequality is multi-faceted. Discrepancies with the officially estimated fall in inequality need not impugn the validity of either data source, but urge critical evaluation of the HIS.
OPEN TO THE PUBLIC