The Journal for Scholars, Students, Community Leaders and Sustainable Developers

Volume 14 No.1-2 2013
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Inequality and Stratification in Jamaica during Economic Adjustment (1991-2000).

by Dr. Pauline Knight (2008). Jamaica: Published by Sir Arthur Lewis Institute of Social and Economic Studies. Cave Hill/Mona/St. Augustine.


The Author uses simple consumption/income regression techniques and decomposition methods of the Gini coefficient to study issues of stratification (both functional and structural) and inequality in Jamaica over the 1990s.


The book begins by looking at some of the consequences of the Structural Transformation Program embarked on in the 1990s by Jamaica. The relationship between inflation, poverty and real consumption is looked at followed by the relationship between GDP growth and inequality. It calls attention to a negative relationship between GDP and inequality at three notable points (1991, 1996 and 2000) during the period. The first point saw the intensification of transformation program policies resulting in severe inflationary effects and major swings in consumption and poverty. This was followed by a marked turning point in 1996, with inequality at its lowest point for the decade and GDP for the first time showing negative growth. By the end of the decade the economy for the first time experienced positive growth and apparent leveling off in inequality trends.


The book establishes that as the economy contracted, inequality fell while the recovery period saw increases in GDP growth, consumption expenditure and also inequality. This relationship and more importantly the factors, both structural and functional, causing changes in inequality during the 1990s is the main focus of the book. The book builds on the work of Boyd (1988), Anderson and Witter (1994), Brown (1994), Handa & King (1996) and King & Handa (2001) and though not mentioned directly, Gordon (1989) and Beckford (1972) (the latter two authors highlighted the role of education as a means of socio-economic mobility).


The book addresses:

  1. The relative contribution of different sources of income and changes in the sources to total income inequality.
  2. The relative importance of a selected set of variables to consumption and inequality and to changes in both.
  3. The relative contribution to changes in consumption of personal and structural factors. In addressing these concerns the book also makes a contribution to the human capital theory and labour market segmentation theory debates.


The author argues that at the start of the decade the consumption ratio for deciles 1 and 10 was 1:14 declining to 1:11 by 2000. This is consistent with the general pattern of redistribution across the consumption hierarchy shown in several studies and in this book, resulting in net improvement in the consumption share of the bottom 70 percent of the population and loss for the top 30 percent. The author expressed some surprise at the fact that increased inequality over the period was also accompanied by households being better off in 2000, evident by the lower poverty head count index.



The author argues that although inequality was higher in 2000 than in 1996, households were better off in 2000. This was justified based on the poverty headcount for the two years which stood at 26.1 and 18.7 percent respectively. Implicit in this argument is the fact we are to assign equal weights to all households regardless of whether they are above or below the poverty threshold or their place in the consumption distribution. Using 10 consumption bands of 20,000 per capita, the book shows that there were more households in bands 1 and 2 in 1996 than in 2000. With the exception of band 5 there were more households in the other bands in 2000 relative to 1996.


In assessing economic growth outcomes the author examined a number of variables:

-          Increasingly educated labour force. Here the fastest growing segment was those with tertiary education which increased by 50 percent in ten years.

-          The proportion of persons with on-the-job training doubled between 1991-2000.

-          Unemployment declined in 2000 relative to 1991.

-          Shift to a service-driven economy.

-          The occupation distribution showed declines in mid-level jobs and strong increases in the unskilled and senior white-collar workers.

-          Non-labour income sources increased in importance in terms of their contribution to consumption over the period.


The author points to a number of significant variables impacting consumption over the period. Some of the variables were shown to impact consumption and inequality measured by Gini index. It is clear from the findings that the factors associated with households’ consumption are dynamic. The differences in these factors highlighted over the period of the study points to the importance of historical measurement errors that may arise in using cross sectional data for one period. By using data for three years the study controls for possible historical measurement errors and identified the variables that consistently impacted consumption and inequality.


The author identifies five cases in which variables are highly correlated but continues to use these variables separately because of interest in their individual theoretical importance, which is quite legitimate but sensitivity analysis should have also been used to establish the effects when the variables are combined and the results compared.


While it is customary to use consumption and income inter-changeably, in the absence of income data, this is usually done with the necessary caveats. The book continues the tradition but does not provide the necessary general caveats either at the point of model specification or interpretation of results. Thus the book refers to the returns of education in a log linear model of consumption which at best is misleading. This problematic is seen in the interpretation of other variables under the section education, training and other labour force characteristics of household members.


Income data is available for 1991 and the book also used that to compute the Gini and investigated how a number of variables impacted inequality. Income from labour, home production and informal safety nets (informal support) contributed the most to per capita income. Using the relative correlation coefficient and effectivity share we see that income from labour and home production contributed more and positively to the level of inequality. Home production normally seen as a coping strategy of the poor is not supported in this work and may point to issues of land ownership, squatting and rural-urban migration. All the other income sources had a reducing effect on the level of inequality, notable among them is income from informal support with a larger inequality reducing effect (and somewhat equal to the positive inequality effect of labor income) relative to official transfers. The issue here is how to design official safety net programmes so that they do not crowd-out informal social safety nets.


The variables having the greatest impact on absolute levels of inequality are not necessarily the ones most responsible for change in inequality. Education, occupation and non-labour income resulted in increases in inequality over the decade. Tertiary education and senior white-collar occupation had a strong positive impact on the Gini, so too for ‘child proportion’ but only for 1991-1996.


Of interest is while support income had a consistent negative impact on the Gini, welfare income had an increasing effect. The question that arises is how Bonding social capital and Bridging social capital, impact inequality? This is clearly an area for further research. It is also seen that ‘some secondary’ education has a negative impact on the Gini in 1991-1996 but a positive effect in 1996-2000 while ‘graduate secondary’ education has a reducing effect for both periods. This finding has implications for the earnings premium associated with different levels of education and how the provision of education, and at what level, contributes to poverty reduction and could have been explored in greater depth. The book goes on to look at personal versus structural factors influencing consumption levels, stratification and inequality. Here the book looks at household education level and the highest examination passed by region and ethnicity before providing a summary and conclusion.


The book continues a tradition of excellent work coming out of the Department of Sociology, Psychology and Social Work and the Social Policy Analysis and Research project at the Planning Institute of Jamaica. It is a first in addressing the issue of inequality in Jamaica in a rigorous way and I am sure it will be added to the reading list of many courses at Colleges and Universities in the Caribbean.



Reviewed by: Dr. Warren Benfield

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