Sectoral Growth and the Distribution of Income across Ethnic Groups in Malaysia

Abstract

The objective of this article is to examine the impact of growth in different production sectors on the distribution of income across ethnic groups in Malaysia. A multiplier decomposition technique for a socio-economic system, represented by a Social Accounting Matrix (SAM), is used to analyze the impacts. Results show that growth in all production sectors tends to increase inter-ethnic income inequality, in particular for households in rural areas. Income inequality can be explained by differences in the payments per employed household across production sectors.