The Only Way Is Up ? Economic Mobility in Malaysia in the 21st Century

Gerton Rongen and Peter Lanjouw

No 10991, Policy Research Working Paper Series from The World Bank

Abstract: This study documents short-term economic mobility in Malaysia over the first two decades of the twenty-first century, at the population level and for various subgroups. The findings show broad and steady improvements in well-being, as evidenced by large decreases in chronic poverty and significant increases in persistent economic security. The study employs a synthetic panel approach based on nationally representative micro-level data for 2004–22, with a refinement that allows presenting bootstrap point estimates and standard deviations. In addition, the study investigates several poverty and vulnerability scenarios, as well as relative mobility. First, the results indicate that chronic poverty has decreased to 2–3 percent of the population. Nevertheless, progress is not uniform: around 15 percent of the population in rural East Malaysia lives in chronic poverty. Second, the study finds considerable increases in sustained economic security—the extent of improvement, however, depends on the approach and income thresholds that are used to define security. Moreover, ethnic and regional differences in secure status are sizable at higher income class thresholds. The largest differences are of a regional dimension: an individual in urban Peninsular Malaysia is more than three times more likely to live in economic security than someone in rural East Malaysia. Altogether, the study observes upward movement across the board but little evidence of dramatic changes in the relative positions of societal groups.

Date: 2024-12-03
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