El Niño or El Peso? Crisis, Poverty and Income Distribution in the Philippines

Using household survey data for 1998, this paper assesses the distributional impact of the recent economic crisis in the Philippines. The results suggest that the impact of the crisis was modest, leading to a 5% reduction in average living standards and a 9% increase in the incidence of poverty, with higher increases indicated for the depth and severity of poverty. The largest share of the overall impact on poverty appears attributable to the El Niño shock as opposed to shocks mediated through the labor market. Both household and community characteristics mattered to the differential impact of the crisis. There is some evidence of consumption smoothing by the crisis-affected households, though the poor amongst them were more constrained in their ability to protect their consumption.