Vulnerability to Poverty in the Philippines: An Examination of Trends from 2003 to 2015

Abstract

The reduction of poverty is at the heart of the development agenda both nationally and globally. This is reflected in the Philippine Development Plan, and the worldwide commitment toward the Sustainable Development Goals. While the measurement of poverty is ex post and thus public interventions are directed at helping those who have been identified as poor, the government must broaden the scope of assessments and take account of the dynamics in poverty in public policy. A critical dimension to poverty dynamics is vulnerability which conceptually pertains to the risk to future poverty. Some of the poor are likely to be poor in the future; some non-poor may also become poor if idiosyncratic and covariate risks to future poverty are not addressed. Thus, risk resilience management strategies are critical. This study continued previous work that involves estimating the vulnerability level of households to income poverty using a modified probit model based on income and other poverty correlates data sourced from the Family Income and Expenditure Survey, as well as the country’s official poverty lines. Past model specifications are improved on by including data on price and climate shocks to welfare, as well as generating the assessment for urban areas alone and for rural areas alone before combining the cross-section results, rather than using a common specification nationally as was done previously. The vulnerability assessment in this study provide inputs to forward-looking interventions that build the resilience of households for preventing or reducing the likelihood of future poverty. The study makes a case for the need to make use of both poverty and vulnerability estimates in programs, and come up with differentiated actions for those highly vulnerable and relatively vulnerable.