Ethnic differences in income in peninsular Malaysia: their sensitivity to the definition and measurement of income
Data from the 1976-1977 Malaysian Family Life Survey are used to examine the sensitivity of conclusions about ethnic differentials in well-being, or "income," to decisions about how to define and measure income and how to summarize its distribution. Measured income differentials are sensitive to how broadly income is defined; to how its distribution is summarized; and to whether one controls for differences in household size and composition, hours of work, urban/rural locations, and other sociodemographic characteristics. For example, depending on the measures chosen, estimates of the amount by which Chinese income exceeds Malays' range from 17 percent to 177 percent. Nonetheless, for all income measures considered, the vast majority of overall income inequality in Peninsular Malaysia is due to differences within ethnic groups rather than among them. These findings have important implications for the formulation, effectiveness, and evaluation of policies designed to affect economic well-being.