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9. Housing Prices, Graduates, and Income Inequality: The Case of Singapore

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Managing Globalization in the Asian Century
This chapter is in the book Managing Globalization in the Asian Century
2219Housing Prices, Graduates, and Income Inequality: The Case of SingaporeTilak Abeysinghe and Wong Yan HaoGlobalization is often blamed for widening income gaps. However, there could be country specific causes of income inequality that could be addressed by domestic policy interventions. This chapter studies whether escalating housing prices have contributed to the growing income gap in Singapore. Housing price escalations involve a substantial income redistribution away from home buyers for owner occupation to property developers, rental property owners, and financiers. This effect is largely reflected in non-labour earnings. Even with household labour income data, we find that rising private property prices have a small but statistically significant effect on income inequality, measured by the percentile ratio P90/P10. Unexpectedly, the most robust variable that explains this income ratio is the share of resident graduates in total employ-ment. This variable shows an inverted U effect on income inequality. A similar inverted U effect is found with a productivity ratio variable used to measure the effect of globalization.1 InTroduCTIonRising income inequality has been a global phenomenon, and Singapore is not an exception. Singapore’s income Gini coefficient among employed resident1 households, for example, increased from 0.457 in 2003 to 0.482 in 2007. This dropped slightly after the global 09 ch9 ManagingGlobal-3P.indd 22121/9/16 4:56 pm
© 2018 ISEAS–Yusof Ishak Institute/Singapore

2219Housing Prices, Graduates, and Income Inequality: The Case of SingaporeTilak Abeysinghe and Wong Yan HaoGlobalization is often blamed for widening income gaps. However, there could be country specific causes of income inequality that could be addressed by domestic policy interventions. This chapter studies whether escalating housing prices have contributed to the growing income gap in Singapore. Housing price escalations involve a substantial income redistribution away from home buyers for owner occupation to property developers, rental property owners, and financiers. This effect is largely reflected in non-labour earnings. Even with household labour income data, we find that rising private property prices have a small but statistically significant effect on income inequality, measured by the percentile ratio P90/P10. Unexpectedly, the most robust variable that explains this income ratio is the share of resident graduates in total employ-ment. This variable shows an inverted U effect on income inequality. A similar inverted U effect is found with a productivity ratio variable used to measure the effect of globalization.1 InTroduCTIonRising income inequality has been a global phenomenon, and Singapore is not an exception. Singapore’s income Gini coefficient among employed resident1 households, for example, increased from 0.457 in 2003 to 0.482 in 2007. This dropped slightly after the global 09 ch9 ManagingGlobal-3P.indd 22121/9/16 4:56 pm
© 2018 ISEAS–Yusof Ishak Institute/Singapore

Chapters in this book

  1. Frontmatter i
  2. Contents ix
  3. Tables xi
  4. Figures xiv
  5. Contributors xviii
  6. 1. Introduction 1
  7. PART 1. SPECIAL TOPICS
  8. 2. ACGE Decomposition Approach to Identifying the Effects of Trade Reform: NAFTA and the U.S. Economy Between 1992 and 1998 27
  9. 3. Economic Analysis versus Business Rent-seeking: The Eclipse of Analysis in Australia 57
  10. 4. Growth Slowdown and the Middle Income Trap in Asia 77
  11. 5. Workers’ Remittances, Capital Inflows, and Economic Growth in Developing Asia and the Pacific Countries 97
  12. 6. Development in Southeast Asia’s Lagging Regions 132
  13. 7. A Comparative Study of Global Production Sharing in the Automotive Industry in China and India 163
  14. 8. La Pesadilla Neoliberal: Why East Asia Did Not Experience a “Neo-liberal Nightmare” While Latin America Did? 193
  15. 9. Housing Prices, Graduates, and Income Inequality: The Case of Singapore 221
  16. 10. The Role of Trade in Fostering Inclusive Growth in the Asia-Pacific 240
  17. 11. The TPP Unveiled: The Good, the Bad, and the Ugly 275
  18. PART 2. COUNTRY STUDIES
  19. 12. The Japanese Macroeconomic Mystery 297
  20. 13. Myanmar’s Opening to the World Economy 333
  21. 14. Trade Policy and Industrialization in India Since the 1991 Reforms 358
  22. 15. Policies toward Globalization in Sri Lanka, 1960–2012: Change and Continuity 393
  23. 16. The Political Economy of the Rajapaksa Decade in Sri Lanka, 2005–14: Policy Contradictions and Mal-governance 428
  24. 17. Has Indonesia Passed the Lewis Turning Point and Does It Matter? 457
  25. 18. Half a Century of Indonesian Economic Development: Continuity and Change 485
  26. Index 525
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https://doi.org/10.1355/9789814762281-012

Chapters in this book

  1. Frontmatter i
  2. Contents ix
  3. Tables xi
  4. Figures xiv
  5. Contributors xviii
  6. 1. Introduction 1
  7. PART 1. SPECIAL TOPICS
  8. 2. ACGE Decomposition Approach to Identifying the Effects of Trade Reform: NAFTA and the U.S. Economy Between 1992 and 1998 27
  9. 3. Economic Analysis versus Business Rent-seeking: The Eclipse of Analysis in Australia 57
  10. 4. Growth Slowdown and the Middle Income Trap in Asia 77
  11. 5. Workers’ Remittances, Capital Inflows, and Economic Growth in Developing Asia and the Pacific Countries 97
  12. 6. Development in Southeast Asia’s Lagging Regions 132
  13. 7. A Comparative Study of Global Production Sharing in the Automotive Industry in China and India 163
  14. 8. La Pesadilla Neoliberal: Why East Asia Did Not Experience a “Neo-liberal Nightmare” While Latin America Did? 193
  15. 9. Housing Prices, Graduates, and Income Inequality: The Case of Singapore 221
  16. 10. The Role of Trade in Fostering Inclusive Growth in the Asia-Pacific 240
  17. 11. The TPP Unveiled: The Good, the Bad, and the Ugly 275
  18. PART 2. COUNTRY STUDIES
  19. 12. The Japanese Macroeconomic Mystery 297
  20. 13. Myanmar’s Opening to the World Economy 333
  21. 14. Trade Policy and Industrialization in India Since the 1991 Reforms 358
  22. 15. Policies toward Globalization in Sri Lanka, 1960–2012: Change and Continuity 393
  23. 16. The Political Economy of the Rajapaksa Decade in Sri Lanka, 2005–14: Policy Contradictions and Mal-governance 428
  24. 17. Has Indonesia Passed the Lewis Turning Point and Does It Matter? 457
  25. 18. Half a Century of Indonesian Economic Development: Continuity and Change 485
  26. Index 525
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