Macroeconomic Conditions as Determinants of Self‐Rated Poverty: Evidence From the Philippines

ABSTRACT Are improvements in objective macroeconomic conditions associated with a reduction in self‐identifying poor households? Since the turn of the 21st century, the Philippines has consistently seen a growth in real output, a reduction in unemployment rate, and relatively targeted inflation. Whereas policymakers associate these economic conditions with a drop in income poverty, not much has been said about the relationship between these factors with subjective (self‐rated) poverty. Fitting time series models on quarterly data from 2005 to 2019 in the Philippines, the paper examines whether overall and sectoral output growth, unemployment, and inflation, explain trends in the incidence of households who self‐rate as poor. The paper finds that the key factors driving changes in the incidence of self‐rated poverty are inflation and changes in unemployment, but not so much overall or sectoral growth. Broadly, the paper builds on the narrow literature on the macro‐level determinants of self‐rated poverty.