Abstract
This study employs a synthetic panel approach based on nationally-representative micro-level data to track poverty and income mobility in Malaysia in the period 2004–2016. On aggregate we observe large reductions in chronic poverty and increases in persistent economic security, but note that those who remain poor in 2016 are increasingly likely to be poor in a structural sense. Further, we find that poverty and income dynamics differ notably across geographic dimensions. Such disparities are most striking when we contrast affluent urban Peninsular Malaysia with poorer rural East Malaysia. Although there are important differences in welfare levels between the main ethnic groups in Malaysia, we observe that mobility trends generally point in the same direction. While our findings show that there is still scope for poverty reduction through the reduction of inter-ethnic inequalities, we underscore the importance of taking regional inequalities into greater account when it comes to ensuring a fairer distribution of socioeconomic opportunities for poor and vulnerable Malaysians. Hence, addressing chronic poverty is likely to require additional attention to less developed geographic areas, as a complement to the largely ethnicity-based policies that have historically played a dominant role.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
Data availability
The data that support the findings of this study were obtained from Department of Statistics Malaysia but restrictions apply to the availability of these data, which were used under license for the current study, and so are not publicly available. Data are however available from the authors upon reasonable request and with permission of Department of Statistics Malaysia.
References
Anand, S.: Inequality and poverty in Malaysia: Measurement and decomposition. World Bank, New York (1983)
Bourguignon, F., Chor-Ching G., Kim D. Il: Estimating Individual Vulnerability to Poverty with Pseudo-Panel Data. World Bank Policy Research Working Paper No. 3375. World Bank, Washington D.C. (2004)
Cruces, G., Lanjouw, P., Lucchetti, L., Perova, E., Vakis, R., Viollaz, M.: Estimating poverty transitions repeated cross-sections: A three-country validation exercise. J. Econ. Inequal. 13, 161–179 (2015)
Dang, H.-A., Lanjouw, P.: Welfare dynamics measurement: two definitions of a vulnerability line. Rev. Income Wealth 63(4), 633–660 (2017)
Dang, H.-A., Lanjouw, P., Luoto, J., McKenzie, D.: Using repeated cross-sections to explore movements in and out of poverty. J. Dev. Econ. 107, 112–128 (2014)
Deaton, A.: Panel data from time series of cross-sections. J. Econ. 30, 109–126 (1985)
Department of Statistics, Malaysia (DOSM): Migration Survey Report, Malaysia, 2016. Department of Statistics, Malaysia, Putrajaya (2017)
Department of Statistics, Malaysia (DOSM): Household Income and Basic Amenities Survey Report, 2019. Department of Statistics, Malaysia, Putrajaya (2020)
Economic Planning Unit: Malaysia: 30 Years of Poverty Reduction, Growth and Racial Harmony. Prime Minister’s Department, Malaysia (2004)
Economic Planning Unit: Malaysia success story in poverty eradication. Prime Minister’s Department, Malaysia (2017)
Garcés-Urzainqui, D., Lanjouw, P., Rongen, G.: Constructing synthetic panels for the purpose of studying poverty dynamics: A primer. Rev. Dev. Econ. 00, 1–13 (2021). https://doi.org/10.1111/rode.12832
Hamid, H., Khalidi, J., Sundaram, J.: A rising tide lifts all boats? Intergenerational social mobility in Malaysia. Khazanah Research Institute, Kuala Lumpur (2019)
Hérault, N., Jenkins, S.: How valid are synthetic panel estimates of poverty dynamics? J. Econ. Inequal. 17, 51–76 (2019)
Ikemoto, Y.: Income distribution in Malaysia: 1957–1980. Dev. Econ. 23(4), 347–367 (1985)
Imai, K.S., Gaiha, R., Kang, W.: Vulnerability and poverty dynamics in Vietnam. Appl. Econ. 43(25), 3603–3618 (2011)
Jomo, K.S., Hui, W.C.: Malaysia@50: Economic Development, Distribution, Disparities. Strategic Information and Research Development Centre, Petaling Jaya (2014)
Justino, P., Litchfield, J., Pham, H.T.: Poverty dynamics during trade reform: evidence from rural Vietnam. Rev. Income Wealth 54(2), 166–192 (2008)
Khalid, M.: Climbing the Ladder: Socioeconomic Mobility in Malaysia. Asian Econ. Pap. 17, 3 (2018)
Kraay, A., van der Weide, R.: Measuring intragenerational mobility using aggregate data. J. Econ. Growth. 27 (2022). https://doi.org/10.1007/s10887-021-09200-2
Kraay, A., McKenzie, D.: Do poverty traps exist? Assessing the evidence. J. Econ. Perspect. 28(3), 127–148 (2014)
Lee, H.-A.: Majority affirmative action in Malaysia: imperatives, compromises and challenges. Accounting for change in diverse societies case series. Global Centre for Pluralism, Ottawa (2017). https://www.pluralism.ca/wp-content/uploads/2017/12/Malaysia_EN.pdf
Lee, H.-A.: Fifty years of Malaysia’s new economic policy: Three chapters with no conclusion. ISEAS Yusof Ishak Institute Economics Working Paper, No. 2021–07 (2021)
Perez, V.: Moving in and out of poverty in Mexico: What can we learn from pseudo-panel methods? ISER Working Paper Series 2015–16, Institute for Social and Economic Research (2015)
Purwono, R., Wardana, W.W., Haryanto, T., Khoerul Mubin, M.: Poverty dynamics in indonesia: empirical evidence from three main approaches. World Dev. Perspect. 23, 100346 (2021)
Ravallion, M.: The economics of poverty: history, measurement, and policy. Oxford University Press, New York (2016)
Ravallion, M.: Ethnic Inequality and poverty in Malaysia since May 1969. Part 1: Inequality. World Dev 134, 105040 (2020a)
Ravallion, M.: Ethnic Inequality and poverty in Malaysia since May 1969. Part 2: Poverty. World Dev 134, 105039 (2020b)
Rongen, G.: Manual for the Estimation of a Synthetic Panel and Vulnerability Analysis. DEEP Methods and Tools Note 01. Data and Evidence to End Extreme Poverty Research Programme, Oxford (2021)
Suryahadi, A., Widyanti, W., Sumarto, S.: Short-term poverty dynamics in rural indonesia during the economic crisis. J. Int. Dev. 15(2), 133–144 (2003)
Thillainathan, R., Cheong, K.-C.: Malaysia’s new economic policy, growth and distribution: Revisiting the debate. Malays. J. Econ. Stud. 53(1), 51–68 (2016)
World Bank: Aspirations unfulfilled. Malaysia’s Cost of Living Challenges. In: Knowledge & Research. The Malaysia Development Experience Series. World Bank Group Global Knowledge and Research Hub in Malaysia, Kuala Lumpur (2020)
World Development Indicators. Available at https://databank.worldbank.org/source/world-development-indicators (2020). Accessed 10 April 2023
Zainuddin, T.D.: A new economic policy for a new Malaysia. Featured in Forum, The Edge Malaysia Weekly (2019). Accessed through https://www.theedgemarkets.com/article/mysay-new-economic-policy-new-malaysia
Acknowledgements
The authors would like to thank two journal referees for their insightful comments. They also thank Chris Elbers, Jomo Kwame Sundaram, Niaz Asadullah, Norman Loayza, Tobias Pfutze, Yu Cao, and other participants at the World Bank Workshop on Income Mobility in Malaysia (Kuala Lumpur, February 2020), the Kuala Lumpur World Bank Research Seminar (March 2021) and the Ninth ECINEQ Meeting (July 2021) for their helpful comments.
Funding
This work was supported by The World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Competing interests
The authors have no competing interests to declare that are relevant to the content of this article.
Additional information
Publisher's note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Supplementary Information
Below is the link to the electronic supplementary material.
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Rongen, G., Ahmad, Z.A., Lanjouw, P. et al. Regional and ethnic inequalities in Malaysian poverty dynamics. J Econ Inequal 22, 101–130 (2024). https://doi.org/10.1007/s10888-023-09582-w
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10888-023-09582-w