Pre and post‐fiscal distributional patterns in Kuwait

Abstract

This paper addresses itself to the income distributional pattern that has emerged in Kuwait one-quarter of a century after the first oil shipment (1946) was exported. Since then, Kuwait has had to depend, to a large extent, on foreign labor to perform it} daily activities. In 1972 about 53 per cent of the country's population and 70 per cent of its labor force were foreigners. Nearly ninety per cent of the foreign population came from neighboring Arab countries. The economy's oil wealth is owned by the state which is by far the largest single employer in the economy.' Public sector plays a predominant role and consequently has a considerable impact on the country's overall distributional pattern. To identify the size distribution of income, we employ three statistical measures-the Gini coefficient, the variance of the logarithm of income and the Atkinson index. The data base we have is the 1972-3 demographic and budget survey kindly provided,to us in its computerized raw and micro form by the Planning Board of Kuwait. A stratified sampling procedure was used to draw 1,163 households, representing about 1.12 per cent of the total households living in the country during the survey period. The nationality breakdown in the sample is similar to the actual breakdown (47 per cent Kuwaitis and 53 per cent non-Kuwaitis). Section I below presents the pre-fiscal distributional pattern. In Section II the distributional impact of fiscal policy is quantified, followed by a discussion of the determinants of the current distributional pattern and the last section provides a summary and concluding remarks.