Capital Outflow Controls and Income Distribution in Malaysia

Abstract

The study seeks to analyze the impact of capital outflow controls, imposed by Malaysian government on September 1998, on income distribution. Regression analysis using OLS (Ordinary Least Square), 2SLS (Two Stages Least Square) and GMM (Generalised Method of Moment) methods of estimation reveals that the capital outflow controls reduce inequality of income distribution in the country. The controls are believed to result in improvement of export-led industries, through devaluation from controls policy. It is also found at the same time that Manufacturing suffers more income inequality between male and female workers than do other sectors of the economy.