Social Accounting Matrix for Ecuador, an income distribution outlook

CENTRAL BANK OF ECUADOR

October 15th , 2020

Seminar on National Accounts for Latin America and the Caribbean: The future of Economic Statistics

PRESENTATION CONTENT

What is a Social AccountingMatrix (SAM) and what is itused for?

Methodology

InformationSources

DevelopedProducts

Result Analysis

1

2

3

45

1: What is a Social Accounting Matrix (SAM) and what isit used for ?

1: What is a SAM and what is it used for ?

• It is a matrix that represents thecircular flow of income for aparticular economy and a specificyear (particular time period)

• It links the productive sector withthe functional distribution ofincome regarding economic actorsand the use that the latter give toincome.

•The SAM addresses issues ofpersonal income distribution andhousehold spending patterns.

Definition

•Distributive analysis of totalincome and expenditurestructure

• Industrial interrelationships witheconomic agents

• SAM is an input for staticsimulations (fixed coefficientmodels).

• Input for the elaboration ofcomputed general equilibriummodels

Applications

1: What is a SAM and what is it used for ?

Types of matrices

Traditional SAM

Table Supply and Demand (TSD) without

transformation +

Integrated EconomyTable (IET)

SAM Input Output Matrix

(IOM)

TSD transformed in (IOM)

IOM Industry

SAM System OfNational

Accounting(SNA)

A perspective of resourcesand uses

2: Methodology

2: Methodology: Deductive Method

Development of a

Macro

SAM

• It shows the macroeconomic aggregates that must be divided

• It allows a verification of the macroeconomic balances in National Accounts

Development of a Micro

SAM

• Industries, products and agents are disaggregated

• TSD at level 1 and IET for 5 institutional sectors including the Rest of the World

• IOT I*I is also used

Openinghouseholds

• In order to obtain deciles of consumption and income, household surveys arecarried out : there are 10 different households

• Determination of variable structures are needed including: income,expenditure, transfers and salaries

• An econometric model is applied to correct compensation for under-declarationand reach the level of the Macroeconomic National Accounts

• An econometric model is applied for the structure of the Capital Account

2: Methodology: MICRO-SAM Opening

Production

Matrix

Supply and intermediatedemand (ID)

IOT symmetric matrix

Import +

M de ID

Taxation of products

Subsidies ofproducts

Custom duties

Functional IncomeDistribution

Wages and salaries plus social

contributions

Gross operatingsurplus + mixed

income

Taxes on production

Final DemandVectors

Non-profitInstitutions (NPI)

Final GovernmentConsumption

Final HouseholdConsumption

Gross FixedCapital Formation

(GFCF)

Exports

Redistribution ofIncome Matrix

Dividends

Utilities

Interest gains

Transfers

Capital Account

Savings

Net Loan

Change Existences

Gross FixedCapital

Formation

3: Information Sources

3: Information Sources

• Generation and use of production in current values

• 72 products and 69 activitiesSupply – Demand Table (SDT)

• It uses the symmetric matrix of 71 x 71 industries in current valuesImput and Output Matriz (IOM)

• It offers a global vision of the economy through institutional sectors:Societies, Households, Government, NPISH, Rest of the world)Integrated Economic Table (IET)

• Disaggregation through household deciles of income

• Functional and personal distribution of the income

• 5th and 6th ECV surveys were used (2006-2007 and 2014).

Conditions of Life Survey (ECV)

• Disaggregation of deciles of consumption specific productsIncome and Expenditure HouseholdSurvey (ENIGHUR )

• Disaggregation of deciles of income for Gross Fixed Capital Formation

Employment and UnemploymentSurvey (Enemdu) + NationalEconomic Census (CENEC)

4: Developed Products

Traditional

view SAM 2007

Traditionalview SAM

2014

SAM view IOM 2007

SAM view IOM 2014

Shock simulator of

SAM 2007 IOM view

Shock simulator SAM2014 IOM view

4: Developed and Published

https://contenido.bce.fin.ec/documentos/PublicacionesNotas/Catalogo/CuentasNacionales/MCS/Indice.htm• Matrix at macro and micro level• Simulators• Methodological Notebooks• Distributive Analysis

5: Results Analysis

Distributive Statistics

1: Personal HoseholdIncome Structure

2: HoseholdExpenditure Structure

5: Results Analysis

5: Results Analysis, Distributive Statistics

There is a distributive change in income between Ecuadorian households through the years 2006 and 2014

Sorce: INEC, ECVDeveloped by: Central Bank of Ecuador

Sorce : INEC, ECVDeveloped by: Central Bank of Ecuador

39.3

44.8

52.2

38.3

25.8

13.60

18.80 20.10

12.90

5.70

0

10

20

30

40

50

60

1995 1998 1999 2006 2014

Poverty and Extreme Poverty ConsumptionNational (urban y rural)

Poverty Extrem Poverty

0.42

0.440.45 0.46

0.410.40

0.420.42 0.43

0.39

0.37

0.380.39

0.40

0.35

0.32

0.34

0.36

0.38

0.4

0.42

0.44

0.46

0.48

1995 1998 1999 2006 2014

Gini Coeficient of consumption

National Gini Urban Gini

5: Results Analysis, Personal Household’s Income

At a microeconomic, thetotal income between

households is analyzed:

The richest decile (tenth) represented 15.6 times higherthan the total income of the poorest decile in 2007, however for 2014 this relationship is 12.2 times richer

.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Decile1 Decile2 Decile3 Decile4 Decile5 Decile6 Decile7 Decile8 Decile9 Decile10

2.33.4

4.35.1

6.17.2

8.9

11.3

15.6

35.9

2.74.0

4.85.7

6.67.8

9.1

11.4

15.0

33.0

Evolution of the participation of total income by deciles

Income Structure 2007 Income Structure 2014

The growth in income is reflected in the final consumption expenditure of households.

5: Results Analysis, Household Expenditure Structure

00

05

10

15

20

25

30

Decile1 Decile2 Decile3 Decile4 Decile5 Decile6 Decile7 Decile8 Decile9 Decile10

3.8

4.85.5

6.37.2

8.29.3

11.5

15.0

28.5

4.25.4 6.0

6.97.6

8.79.8

11.4

14.7

25.4

Structure of final consumption of manufactured prodcts

Structure 2007 Structure 2014