สถาบันวิจัยเศรษฐกิจป๋วย อึ๊งภากรณ์

ผลงานวิจัยฉบับเต็มโดยนักวิจัยของสถาบันและนักวิชาการภายนอก

MYTHS AND FACTS ABOUT INEQUALITIES IN THAILAND

 

No. 144
27 พฤศจิกายน 2563

Myths and Facts about Inequalities in Thailand

abstract

This paper analyzes inequalities in Thailand over the past three decades and the implications of Covid-19 on existing inequalities. We show that while total income and consumption inequalities in Thailand have been declining, it raises concerns regarding some drivers behind the declining trends. First, the decline in income inequality among the older households is largely driven by private transfers. Given Thailand’s demographic transformation into aging society, this channel is not sustainable. Second, despite the increasing longevity trend, household heads aged 55-69 years old have become inactive in the labor markets over the years. Among active households, the earnings inequality among households who mainly earn from farming activities has risen. However, such increase was masked at the aggregate level because of the higher shares of households working in non-farm sectors and the decline in their earnings inequality. Third, while consumption inequality has fallen similarly to income inequality for all age groups, the low-income households remain highly exposed to income shock. These poor households have much higher shares of essential spending, which are harder to adjust. Finally, while the full effects of Covid-19 on inequality are still unfolding, our evidence shows that in the short-run the poor and the low educated are vulnerable to job and earnings losses.

No. 143
8 ตุลาคม 2563

How Do Taxpayers Respond to Tax Subsidy for Long-term Savings? Evidence from Thailand’s Tax Return Data

abstract

This paper uses a panel of personal income tax return data for the population of Thai tax filers to examine how individuals respond to tax subsidy for long-term savings. We utilize the 2013 tax reform that lowered the price subsidy for long-term savings in order to obtain causal identification. Our difference-in-difference analysis illustrates that there is a considerable heterogeneity in the individual responses to the subsidy cut—with middle-income taxpayers responding much greater than their high-income counterparts. Among the middle-income group, we also find that the subsidy reduction has larger effects on decisions of smaller contributors. Finally, we provide some suggestive evidence that taxpayers who are younger, less financially sophisticated and less financially disciplined exhibit stronger responses to the subsidy cut. Our findings shed light on the heterogeneity of individual responses which are crucial for policymakers who consider an incremental change in the existing tax incentive scheme.

No. 142
21 กรกฎาคม 2563

All I have to do is dream? The role of aspirations in intergenerational mobility and well-being

Warn N. Lekfuangfu and Reto Odermatt

abstract

We study the determinants and consequences of educational and occupational aspirations. Basing our enquiry on the British NCDS 1958 cohort data, we assess the importance of aspirations for social mobility above and beyond other established determinants. We document educational and occupational inequalities in young individuals’ aspirations, whereby parental aspirations are a strong predictor of children’s aspiration-levels. While we find a positive correlation between aspirations and later achievement, we also provide evidence for reduced well-being in adulthood if aspirations in adolescence were higher than actual achievements later in life.

No. 141
15 มิถุนายน 2563

The Income and Consumption Effects of Covid-19 and the Role of Public Policy

Suphanit Piyapromdee and Peter Spittal

abstract

This paper provides empirical evidence on how the labour market impacts of the covid-19 pandemic vary across workers’ incomes, assets, characteristics and household structures in the UK. Using data from the UK Household Longitudinal Study, we find that less educated and young workers are most likely to be laid-off. This is particularly the case for females. Moreover, less educated workers tend to have low income and low assets, limiting their ability to maintain consumption in the face of reduced income. This is compounded at the household level by assortative partnering between workers with similar education levels. We analyse the source of these inequalities by relating employment outcomes to factors related occupational and industrial characteristics. We then conduct a quantitative assessment of the likely impact of covid-19 on households’ consumption and find that, because the adverse labour market impacts are concentrated on workers with low income and low assets, 70 percent of households in the bottom fifth of the income distribution cannot maintain their usual expenditure for even one week. Finally, we consider the effectiveness and distributional implications of two different policy interventions: the Coronavirus Job Retention Scheme in the UK and Economic Impact Payments in the US. Our findings suggest that both policies can alleviate the increase in consumption inequality that would have otherwise arisen during the pandemic. In the short term, the US-style one-off payment is most effective at providing affected households with the means to smooth consumption. However, the CJRS provides better insurance against prolonged disruption as the program provides continuous income support.

No. 140
8 มิถุนายน 2563

Common Ownership, Domestic Competition, and Export: Evidence from Thailand

abstract

We use administrative data of all registered firms in Thailand, both public and private, to study the relationships between common ownership, market power, and firms’ export behaviors. Our results suggest that firms in ownership networks tend to have higher market power as measured by markup. In addition, markup is negatively associated with a firm’s propensity to export, its likelihood of product upgrade, and the chance of survival in foreign markets. Our findings have policy implications on antitrust regulations and competitiveness policies, especially in export-oriented economies dominated by powerful business conglomerates.

No. 139
4 มิถุนายน 2563

Understanding the Bimodality of the Export Intensity Distribution in Thailand

abstract

The literature has established a pattern that exporters in developed countries sell most of their output in their domestic markets. However, recent evidence finds that firm-level export intensity, defined as the ratio of exports to revenue, in at least 47 countries is bimodally distributed. In this paper, we investigate the determinants of the bimodality of Thailand’s export intensity distribution by using Thailand’s manufacturing firm-level census data covering the period between 2007-2017. We do not find evidence that firm productivity can explain the variation in export intensity. We document that firms with export intensity at least 90 percent, so-called “pure exporters,” can be explained by (i) the firm’s characteristics, (ii) the demand-side factor, and (iii) the government’s policy. Pure exporters are relatively young, have foreign ownership, produce narrow product variety, and export to high-income countries. The government’s policy, such as investment promotion, can raise firms’ export intensity and encourage firms to become pure exporters, there by emphasizing another important channel through which the government can increase exports.

No. 138
27 พฤษภาคม 2563

Cash flow uncertainty and IPO underpricing: Evidence from Thai REITs

Kanis Saengchote and Chittisa Charoenpanich

abstract

REIT IPOs in Thailand are less underpriced than stock IPOs (2.45% compared to 23.0%), which is a common finding across many international markets (Chan, Chen and Wang, 2013). One of the most common explanations for IPO underpricing is adverse selection arising from information asymmetry. However, research in IPO tends not to investigate this issue directly due to the difficulty in estimating ex-ante uncertainty. REITs provide a unique research setting because some REITs enjoy income guarantee, which can reduce cash flow uncertainty. We find that REITs with income guarantee are much less underpriced on average, corroborating the linkage between cash flow uncertainty and IPO underpricing. We confirm that REITs with income guarantee tend to have lower systematic risk (measured by CAPM beta) and returns, making the nature of some REITs more debt-like than equity-like.

No. 137
12 พฤษภาคม 2563

Effect of Minimum Wage on Changes in the Thai Labor Market

abstract

This study evaluates the effect of the minimum wage on changes in the Thai labor market from 2002 to 2010, when the real minimum wage gradually decreased, and 2011 to 2013 when the real minimum wage substantially increased. These changes include labor force participation, employment, dis-employment, weekly working hours, real hourly wages, real hourly total labor income, and various other types of income. This study uses the individual-level panel data generated from the Matched-Outgoing Rotation Group (Matched-ORG) of the Thai Labor Force Survey. We observed the negative effect of minimum wage on employment, where the elasticity was in the range of – 0.0029 to -0.0474. We also observed the dis-employment for the foreign workers. We found that firms adjust working hours and various types of income to mitigate minimum wage shock. We conclude that the competitive equilibrium theory can reasonably explain the effect of minimum wage on employment as well as the overall changes in the Thai labor market from 2002 to 2013.

No. 136
7 พฤษภาคม 2563

Bunching for Free Electricity

abstract

This paper documents the impacts of Thailand’s Free Basic Electricity program on electricity consumption behavior. Under the program, households who use less than 50 units are exempt from paying their electricity bill in that month, while households who use more than 50 units have to pay for the full amount. The program thus creates a large notch in the household’s budget set. In contrast to existing literature that finds little or no bunching, we observe a distinct bunching of electricity consumption around the threshold. Nonetheless, the excess bunching is still small compared to the overall distribution. We provide possible explanations on the role of various optimization frictions.

No. 135
5 พฤษภาคม 2563

Delinquency Priority in Consumer Credit: Evidence from Thai Microdata

abstract

This study examines the question of how consumer prioritize default across products. We find that about a third of Thai individuals who face default decisions on mortgage and non-mortgage loans choose to default on mortgage loans first. As predicted by theory, their decisions are influenced by relative debt burden and amount of housing equity, consistent with both the ability to pay and the willingness to pay channels. We also find a puzzling result that borrowers who hold older mortgage loans are more likely to default on their mortgages; we hypothesize that this is perhaps related to refinancing.

No. 134
27 เมษายน 2563

Incorporating Discrete Choice Experiments into Policy Decisions: Case of Designing Public Long-Term Care Insurance

abstract

Discrete choice experiments (DCEs) have been widely used to elicit preferences in the health economics field but recent reviews found that DCE results are rarely incorporated into health policy decisions. We conjecture that one reason is most health policy practitioners only focus on estimating marginal willingness to pay (MWTP), the measure that is not directly applicable for policy-related questions. We show that when designing a new program, translating preference information into the demand for packages and benefits of alternative schemes (the choices made available) can make the DCE results more policy relevant. This concept is illustrated using data collected to evaluate the benefits of introducing a public long-term care insurance program to a middle-income country, Thailand. We find that preferences are very heterogeneous, implying that no one-size-fits-all solution exists. The estimates from the preferred model are then used to calculate benefits and losses (based on the consumer surplus measure) for plausible implementation scenarios such as different universal schemes, multiple-tier schemes, and schemes in which premium are subsidized for low-income households.

No. 133
24 เมษายน 2563

On Covid-19: New Implications of Job Task Requirements and Spouse’s Occupational Sorting

abstract

The Covid-19 pandemic has disrupted working life in many ways, the negative consequences of which may be distributed unevenly under lockdown regulations. In this paper, we construct a new set of pandemic-related indices from the Occupational Information Network (O*NET) using factor analysis. The indices capture two key dimensions of job task requirements: (i) the extent to which jobs can be adaptable to work from home; and (ii) the degree of infection risk at workplace. The interaction of these two dimensions help identify which groups of workers are more vulnerable to income losses, and which groups of occupations pose more risk to public health. This information is crucial for both designing appropriate supporting programs and finding a strategy to reopen the economy while controlling the spread of the virus. In our application, we map the indices to the labor force survey of a developing country, Thailand, to analyze these new labor market risks. We document differences in job characteristics across income groups, at both individual and household levels. First, low income individuals tend to work in occupations that require less physical interaction (lower risk of infection) but are less adaptable to work from home (higher risk of income/job loss) than high income people. Second, the positive occupational sorting among low-income couples amplifies these differences at the household level. Consequently, low-income families tend to face a disproportionately larger risk of income/job loss from lockdown measures. In addition, the different exposure to infection and income risks between income groups can play an important role in shaping up the timing and optimal strategies to unlock the economy.

No. 132
22 เมษายน 2563

Digital Thailand: Analyzing the Impact of Broadband Connectivity on Firm Productivity

abstract

Using a large dataset of almost 100,000 manufacturing establishments in Thailand, this paper studies the impact of broadband internet connectivity on firms’ total factor productivity (TFP). The author finds that, for micro-, small-, and medium-sized enterprises, broadband adoption can raise productivity by 23% to 54%. These results support the government’s policies in building the country’s broadband infrastructure. Although the results reveal substantial benefits of broadband adoption, especially for smaller-sized firms, only about 30% of firms reported adopting broadband or having any types of ICT investments. Perhaps, more could be done to encourage broadband adoptions and private ICT investments for firms of all sizes.

No. 131
16 เมษายน 2563

Mutual Fund Participation in IPOs: Thai Evidence

abstract

Underwriters and co-managers play an important role in IPOs, but because they often have affiliated mutual funds, concerns about conflicts of interest can arise. On the one hand, they can use this affiliation for the benefit of their asset management business (the information advantage hypothesis); on the other hand, they can use mutual funds under their control to support their IPO clients (the quid pro quo hypothesis). In this article, we find that the behavior of lead underwriter-affiliated funds in Thailand is more consistent with the information advantage hypothesis and co-manager-affiliated funds more consistent with the quid pro quo hypothesis. We also find further evidence of strategic placement of IPO stocks within fund family.

No. 130
14 เมษายน 2563

Uncertainty and Economic Activity: Does it Matter for Thailand?

abstract

This paper investigates the role of domestic and foreign uncertainty shocks for macroeconomic dynamics in Thailand. We construct and compare various indicators of economic and policy uncertainty, including macroeconomic and financial uncertainty, as well as monetary policy, fiscal policy, and political uncertainty. We find that while all uncertainty measures display countercyclical behavior, they generate heterogenous effects on real GDP and its components depending on the type of shock. In general, the magnitude of real activity decline in response to economic and policy uncertainty shocks are on the scale of 1-2 percent, with most of the transmission occurring through investment and trade flows rather than consumption demand. In terms of persistence, Thai macroeconomic uncertainty shocks generate sudden impacts, while the effect of other shocks on the economy are more gradual. Despite being a small open economy, we find that domestic uncertainty shocks can be as prominent as uncertainty shocks that spillover from abroad. Thai monetary policy shocks generate declines in real activity that are as large and persistent as US financial uncertainty shocks, whereas the impact of both Thai fiscal policy uncertainty and US economic policy are both rather short-lived. Furthermore, we find that uncertainty is a key driver of fluctuations in domestic output, with certain types of uncertainty being able to explain up to 40 percent of the variation in real activity, even in the long run. Finally, we observe asymmetry in the effects of downside versus upside economic uncertainty shocks, but no difference between uncertainty of short versus long horizons.