Spatial income inequality, convergence, and regional development in a lower middle-income country: Satellite evidence from the Philippines
Journal: The Developing Economies
Abstract: This paper examines spatial income inequality and convergence in the Philippines—a lower middle-income country with historically high inequality—and its course over the process of economic development. Combining higher quality nighttime lights (NTLs) with gridded population data, I construct subnational measures of spatial inequality for the 17 administrative regions in the country in the period 2000–2020. Using this unique dataset, I first document the tremendous improvement in income disparities over the last two decades. Income per capita across provinces has converged rapidly, and income dispersion within administrative regions has narrowed markedly. Then, I uncover a U-shaped relationship between spatial inequality and economic development, which is robust; across alternative measures of inequality; to the outlier effects of highly urbanized cities; across parametric and semiparametric specifications; to business-cycle effects; and to persistence of spatial inequality. Finally, I confirm that structural transformation acts as a transmission channel of this U-shaped link.
Recommended citation: Pagaduan, J.A. (2023), Spatial Income Inequality, Convergence, and Regional Development in a Lower Middle-Income Country: Satellite Evidence from the Philippines. The Developing Economies, 61: 117-154. https://doi.org/10.1111/deve.12354
Do higher-quality nighttime lights predict subnational GDP in developing countries? Evidence from the Philippines
Journal: Asian Economic Journal
Abstract: Nighttime lights (NTL) data from satellites are a useful proxy for local economic activity in developing countries where economic data are sparse. Yet most analyses use the flawed DMSP NTL data, a poor proxy for GDP in less densely populated and highly agricultural rural areas. In this article, we augment a novel NTL dataset of the newer and better VIIRS NTL data with more ubiquitous remotely sensed data, namely, net primary productivity (NPP) and land cover, and we test whether these satellite data predict subnational GDP in both urban and rural sectors of the Philippines. The results confirm that the higher-quality VIIRS NTL data predict urban economic activity sufficiently well for both light-intense and dimly lit regions but still do not explain rural economic activity very well. The use of croplands NPP as an intensive measure of agricultural productivity, however, dramatically improves the performance of land cover as a proxy. We demonstrate that remotely sensed data can be useful in various applications, including evaluating the long-run dynamics of province-level GDP growth, the local impact of natural disasters, and the effects of infrastructure projects at the city and municipal levels. Such applications point toward the need for empirical analysis of growth at finer scales of aggregation.
Recommended citation: Pagaduan, J. A. (2022). Do higher-quality nighttime lights and net primary productivity predict subnational GDP in developing countries? Evidence from the Philippines. Asian Economic Journal, 36(3), 288–317. https://doi.org/10.1111/asej.12278
Are Filipino smokers more sensitive to cigarette prices due to the sin tax reform law?: A difference-in-difference analysis
Journal: DLSU Business & Economics Review
Abstract: Employing a two-part estimation model using the Family Income Expenditure Survey before (2009) and after (2015) the tax reform, our study assessed the impact of the Philippine Sin Tax Reform Act (2012) on cigarette consumption and the responsiveness of cigarette consumption to price changes. The results are consistent with existing studies that cigarette consumption is price inelastic. The demand, however, has become less inelastic in the Philippines over the period 2009 to 2015, indicating a more responsive cigarette demand to price increases. Of the total effect of cigarette price increase on demand, the decrease in consumption by smokers (smoking intensity) accounts for much of the decline in cigarette consumption, rather than the decrease in the number of cigarette users (smoking prevalence). The increase in excise tax due to the tax reform has been effective on lowering cigarette consumption in the country and in making cigarette demand more responsive to price increases. Specifically, the tax reform has reduced the number of cigarettes purchased by smokers more than the number of cigarette users.
Recommended citation: Austria, M. and Pagaduan, J. (2019). Are Filipino smokers more sensitive to cigarette prices due to the sin tax reform law?: A difference-in-difference analysis. DLSU Business & Economics Review, 28(2), 10-25.
Macroprudential regulation in a DSGE model of the Philippines with financial-real linkages
Journal: DLSU Business & Economics Review
Abstract: We develop a small open economy New Keynesian DSGE model of financial-real linkages with banking intermediation and macroprudential regulation. The study has two main objectives: (i) understand the role of banking intermediation and financial frictions in the transmission of monetary policy; and (ii) examine the implications of macroprudential regulation of the banking system to the real economy. The results of our research suggest that although the macroprudential tools used by central banks may achieve the goal of safeguarding financial stability of the banking system, it is important to watch out for their effects to the short-run business cycle fluctuations of the real economy.
Recommended citation: Pagaduan, J and Majuca, R. (2016). Macroprudential regulation in a DSGE model of the Philippines with financial-real linkages (with Ruperto Majuca). DLSU Business & Economics Review, 25(2), 1-23.
Does weather affect local economic growth? Evidence from the world's most natural disaster-prone country
Journal: Environment and Development Economics (Accepted for Publication)
Abstract: Combining novel nighttime lights data with high-resolution atmospheric reanalysis, this paper exploits the random annual variation in temperature and precipitation to identify the causal effects of weather disturbances on local economic growth in the Philippines, the world’s most disaster-prone country. First, we find that increased temperature variability decreases growth, but only in poor municipalities. Second, poor municipalities suffer the largest costs of elevated temperature variability in the medium run. Third, we show that weather shocks affect growth in a nonlinear fashion. Finally, temperature and precipitation shocks affect income growth mainly through reduced growth in agricultural output and services such as education, health, and retail trade. Overall, our findings highlight the importance of understanding the distributional impact of climate change within countries, its underlying mechanisms, and how economic development policies can help shield poor municipalities from the vagaries of the weather.
The long-run and intergenerational effects of early life exposure to droughts and wet shocks on human capital: Longitudinal evidence from the Philippines
Accepted for presentation at the 2025 World Congress of the Econometric Society (ESWC 2025) to be held from Monday, August 18 to Friday, August 22, 2025 in Seoul, Korea. Awarded scholarship prize of USD 2,000.
Accepted for presentation at the 12th International Conference on Asia and Pacific Economies (CAPE) hosted by Xi’an Jiaotong-Liverpool University (XJTLU) and Asian Development Bank Institute (ADBI) on May 23-24, 2025 in Suzhou, China.
Accepted for presentation at the 48th Federation of ASEAN Economic Associations Conference (FAEA 2025) hosted by Persatuan Ekonomi Malaysia (Malaysian Economic Association) and Universiti Malaya on 19-20 November 2025, Berjaya Times Square Hotel, Kuala Lumpur, Malaysia
Abstract: Less or more rain, forever pain? This paper examines the long-run and intergenerational effects of early life exposure to droughts and wet shocks on human capital outcomes over the life course. Combining a unique three-decade longitudinal survey of pregnant mothers in Metropolitan Cebu, Philippines with a high-resolution gridded precipitation dataset, we identify lingering adverse effects of rainfall anomalies around the time of birth on child growth, cognitive and noncognitive abilities, educational achievement, and hours worked and earnings. We uncover that these detrimental effects can cascade through the next generation, and that women suffer the greatest impact. Lastly, we explore how increased commodity prices and heightened risk of diarrhea may serve as potential mechanisms.
Early life heat stress and adult mental health: Longitudinal evidence from the Philippines
Work in progress.
The fetal origins of women empowerment
Work in progress.
The impact of COVID-19 on developing Asian economies: The role of outbreak severity, containment stringency, and mobility declines (with Abdul Abiad, Mia Arao, Editha Lavina, Reizle Platitas, and Christian Jabagat)
E-Book: COVID-19 in Developing Economies. VoxEu.org Book. CEPR Press.
The economic impact of the COVID-19 outbreak on Developing Asia (with Abdul Abiad, Mia Arao, Suzette Dagli, Benno Ferrarini, Ilan Noy, Patrick Osewe, Donghyun Park, and Reizle Platitas)
Policy Brief: ADB Briefs No. 128.
The impact of COVID-19 on Developing Asia: The pandemic extends into 2021 (with Abdul Abiad, Reizle Platitas, Christian Regie Jabagat, and Editha Laviña)
Policy Brief: ADB Briefs No. 159.
Transmission channels of economic shocks in ASEAN (with Ruperto Majuca)
Policy Brief: ERIA Policy Brief No. 2015-01.
Strategies for Rapidly Decoupling Carbon Dioxide Emissions from GDP in Asia and the Pacific
Blog: Asian Development Blog (Asian Development Bank)
How are countries in Developing Asia responding to COVID-19?: An exploratory data analysis using Pandas, Matplotlib, and Seaborn
Blog: Towards Data Science
Automate your economic report using Python!
Blog: Towards Data Science