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Income Distribution and Poverty Alleviation for the Native Hawaiian Community

Income Distribution and Poverty Alleviation for the Native Hawaiian Community. Seiji Naya Presentation at the 2nd Annual Hawaiian Business Conference Hawaii Convention Center May 22-23, 2007. DISCUSSION TOPICS. 1. Poverty and Growth --- large poverty rate for Native Hawaiians

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Income Distribution and Poverty Alleviation for the Native Hawaiian Community

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  1. Income Distribution and Poverty Alleviation for the Native Hawaiian Community Seiji Naya Presentation at the 2nd Annual Hawaiian Business Conference Hawaii Convention Center May 22-23, 2007

  2. DISCUSSION TOPICS 1. Poverty and Growth --- large poverty rate for Native Hawaiians 2. Is income distribution so bad that the rich get the lion’s share of income, leaving little to the Native Hawaiians? Findings show the answer is “not too bad but should be improved” 3. This analysis examines the components of income and considers factors related to poverty 4. Recommendations to help with business development for Native Hawaiians !!! Apology for some technical terms in my presentation.

  3. Two newspaper articles in April 2007 1. Hawaii has the largest % of millionaires in terms ofHousehold Income HawaiiU.S. 6.8% 4.8% 2. Our Poverty Rate is lower than the U.S. average HawaiiU.S. 9.8% 13.3% BUT … this does not reveal the Native Hawaiian case.

  4. Table 1. Income and Poverty: 1979 and 2005 • Despite higher growth, higher poverty lingers • Economic growth is no guarantee of lower poverty level

  5. Table 2. Size of Income Groups: 2005 • We measure income distribution by these groups

  6. Income Distribution Measures Twomost commonly used measures of income distribution: 1. Size Distribution of Income from which we derive: a. The Lorenz Curve: divides income recipients into different groups according to ascending levels and determines the % of that income received by each group b. Gini Coefficient: measures equality or inequality of Income Distribution 2. Kuznets Ratio: Ratio of top high-income 20% to the bottom 40%. The higher the ratio, the more going to the rich and less to the poor.

  7. B % of Income D A C % of Income Recipients Figure 2. Lorenz Curve Lorenz Curve Gini Perfect equality AB 0 Perfect inequality ACB 1 Equal distribution range 0.20 – 0.35 Unequal distribution range 0.50 – 0.70

  8. Figure 4. Size Distribution of Per Capita Personal Income: 2005 In each of all five higher-income categories, shares of Native Hawaiians are lower. It is cIear that the number of Native Hawaiians earning higher income (e.g. 5.1% for $50,000 and more vs. 10.1% for Non-Native Hawaiians) is much smaller, but earning low income is much larger, explaining why poverty is much higher.

  9. Figure 3. Family Income Distribution: 2005 The lines are almost identical. But the Gini Coefficient for Native Hawaiians (0.43) is slightly higher than that for Non-Native Hawaiians (0.38), the later is a little closer to the diagonal line. Income distribution is relatively equal but, in the case of Native Hawaiians, income is so much lower.

  10. Table 3. Gini Coefficient and Kuznets Ratio: 2005

  11. Figure 5. Share of Native Hawaiian Households andPersons by Income Level: 2005 Bars: % of Households by household income level Line Graph: % of persons by per capita level Note the difference in the pattern of the two. The bar graph (household income) shows a less-pronounced fall compared to the line graph (per capita), i.e. Native Hawaiians do better at household level income than per capita income.

  12. Table 4. Average Household Size One possible explanation is that Native Hawaiians are more egalitarian and help each other (Ohana spirit) resulting in a narrower income gap at household and family level than individual per-capital income level.

  13. Table 5. Income Structure: 2005 Native Hawaiians are low in all the categories except public assistance income. Especially low: interest, dividends, rental income, and self-employment income (21% and 35% of Non-Native Hawaiians, respectively).

  14. Table 6. Possible Factors of Low Income for Native Hawaiians

  15. Grameen Bank approach of community-based micro-loans may be one solution • Idea conceived by Mr. Yunus, recipient of Nobel Peace Prize (2006) • Promoted by World Bank and Asian Development Bank • Mutual responsibilities of 4-5 person group • Peer-to-peer monitoring • The Bank organizes training and technical assistance programs forborrowers • Recommendation that OHA consider this approach in conjunction with private banks or by itself

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