Swings in the Economic Support Ratio and Income Inequality

Andrew Mason, University of Hawaii at Manoa
Sang-Hyop Lee, University of Hawaii at Manoa

This paper examines the impact on household income inequality of swings in the economic support ratio due to changes in population age structure and increases in female labor force participation. Analysis is based on household survey data for Taiwan (1978 to 1998) and the Philippines (1985 to 1997), two countries with very distinctive economic and demographic histories. Preliminary analysis shows that the rise in the share of women's earning has reduced the log variance of income per earner in both countries. The log-variance of the support ratio is high and stable in the Philippines; low and declining in Taiwan. The co-variance between income per earner and the support ratio is strongly negative but trending towards zero in both countries. In both countries changes in the support ratio have reduced per capita income inequality.