AND GROW TH I N PAKI STAN; TO

Transcription

1 TRENDS I N I NEQUALI TY, W ELFARE AND GROW TH I N PAKI STAN; TO By Nadia Zakir Dec 02, 08

2 I ntroduction In we have a basic problem of unsustainable growth over the years Table 1: Growth and Distribution in Period 1960s 1970s 1980s 1990s 2000s* Growth(%) distribution Improved Worsened Slightly improved Worsened Worsened Economic growth has remained high but it has also failed improve the living conditions of the poor segment of the society. Growth can never sustain without a proper income distribution in the country Inequality and Welfare measurement is important for achieving sustainable growth, economic development, poverty reduction and fruitful public policies. This implies that a consistent longterm analysis of income inequality and Welfare is essential for any further analysis 2

3 Objective of t he Study To present a consistent time series of (income and consumption) inequalities, welfare and growth in and its ruralurban areas from

4 Review of Literature Huge Literature on Measurement of / Consumption Inequality Pioneering work of Haq (1964) Classification of Earlier Studies on Measurement of / Consumption Inequality With respect the data source With respect the format of data used With respect area coverage With respect choice of the welfare indicar With respect the measures used access inequality With respect choice of the unit of measurement 4

5 Table2: Comparative Analysis of Studies Measuring / Consumption Inequalities in Study Data Source and Format Period of Analysis Region of Analysis Welfare Indicar Measure of Inequality Unit of Measurement Haq (1964) tax data (Grouped) Gini coefficient, Pare coefficient and Relative shares Personal Bergan (1967) tax data (Grouped data) Pak. Gini coefficient Azfar (1973) (Grouped data) Pak. Gini coefficient and Coefficient of variation Khandker (1973) (Grouped data) Pak. Gini coefficient Per Capita Naseem (1973) (Grouped data) Pak. Consumption Gini coefficient Per Capita Alauddin (1975) (Grouped data) Pak. and Consumption Gini coefficient Per Capita Mahmood (1984) (Grouped data) Pak. Gini coefficient, Coefficient of variation, SD. of log of income, Theil Index and Atkinson index Choudhary (1984) (Grouped data) Pak. Gini coefficient, Coefficient of variation, SD. of logs of income, Deciles and Quintiles Per Capita Kruijk& Leeuwen (1985) (Grouped data) and Pak. Gini coefficient, Coefficient of variation, SD. of logs of income and Theil index Ahmad & Ludlow (1989) (micro data) and Pak. Provinces and Consumption Gini coefficient, Coefficient of variation, logvariance and Atkinson index Jehle (1992) (micro data) Provinces Consumption Atkinson KolmSen index Per Adult Equivalence Jafri & Khattak (1995) (Micro data) 1991 Pak. Gini coefficient and shares Haq (1998) (Grouped data) 1992 Pak. Consumption Gini coefficient Per Adult Equivalence Ahmad (2000) (Grouped and micro data) 1992 Pak. Provinces Gini coefficient, Coefficient of variation SD of logs of incomes, Theil Index and Atkinson index and Per Capita Jamal (2003) (Micro data) and Pak. Consumption Gini coefficient and Ratio of Quintiles Per Adult Equivalence Anwar (2003) (Micro data) and Pak. Consumption Gini coefficient Per Adult Equivalence

6 Table 3: Inequality Trends in as Shown by the Earlier Studies Author Welfare Indicar Area coverage Inequality Trends in the Sixties and Seventies Khandker (1973) Per Capita urban Naseem (1973) Consumption Per Capita Consumption urban urban Stagnant Stagnant Alauddin (1975) Consumption Per Capita Per Capita Consumption urban urban Stagnant Stagnant Mahmood (1984) Gini Coefficient of Var. Atkinson Index Choudhary (1984) Per Capita Kruijk & Leeuwen (1985) 6

7 (Continued) Table 2: Inequality Trends in as Shown By the Earlier Studies Inequality Trends in the Eighties Author Welfare Indicar Area Ahmad and Ludlow (1989) and Consumption Jafri and Khattak (1995) Stagnant Haq (1998) Consumption Per Adult Equivalent Stagnant Author Welfare Indicar Area Inequality Trends in Late Eighties and Nineties Jamal (2003) Consumption Per Adult Equivalent Anwar (2003) Consumption Per Adult Equivalent 7

8 Due these differences in methods of measurement and shorter period of analysis in previous studies We cannot combine their results evaluate long term trend in distribution We get some contradicry results distribution after the mid eighties Welfare, is quite unexplored area in. The present study is an attempt bridge this gap by not only providing a long period consistent series of income and consumption inequalities, but also by analyzing the trends in welfare and growth. 8

9 Methodological I ssues The Data Source of data Period of analysis Area coverage Inequality measures A good inequality measure should possess following properties o o o o o Symmetry Population principal transfer principal Decomposability Defined limits 9

10 Analysis of Som e Major I nequalit y Measures Measures Coefficient of variation Pigou Daln Principle Scale Independence Decomposable Lower Limit (Perfect Equality) 0 Range Upper limit (Perfect Inequality) (n 1) Kuznet Ratios No No No Y/x Lorenz Curve Gini Coefficient 0 1 Atkinson s index 0 1 Daln s index No 0 Theil s index 0 logn Generalized Entropy 0 Selected inequality measure The Gini coefficient G k 1 1 ( Pi 1 Pi )( Qi 1 where, G is the Gini Coefficient, Pi is the Cumulated proportion of variable and Qi is the Cumulated Proportion of Population variable corresponding income unit, when all income units are arranged in ascending order of income. i 0 Q i ) 10

11 WELFARE MEASURE For the measurement of welfare Sen's welfare index (1974) is used which takes in account both the size and the distribution of income. It is defined as: W ( 1 G ) Where, µ is the mean income and G is the Gini Coefficient measuring inequality. Welfare will be maximum and equal the mean income when there is no inequality (i.e., G = 0) and welfare will be zero when inequality is maximum (i.e., G = 1). REAL MEAN INCOME AND CONSUMPTION The variations in real income /consumption show the true variations in purchasing power of income units. In order calculate real estimates, the nominal figures are adjusted through Consumer price indices. 11

12 I ncom e and Consum ption I nequalit ies and consumption inequalities in and its ruralurban areas ( ) Welfare Indicars i) ii) consumption Units of measurement i) Per Capita inequality o inequality before East separation o inequality in seventies and early eighties o inequality during period o inequality in the mid nineties and thereafter 12

13 ( a) : Tim e Profiles of Per Capit a I ncom e and Consum pt ion I nequality in Gini Coefficient Gini C oefficient inequality declined in the decade of 60s a lower level, then increased till early eighties, improved in mid eighties, sharply rose during and and improved thereafter but the level remained high Till the mid eighties, trend in consumption inequality was same as in income inequality. After that inequality declined till and started increasing again the previous level. 13

14 versus urban inequality The regional analysis in general shows that throughout the period of analysis income and consumption inequalities were more severe in urban areas than in the rural areas. I ncom e versus Consum pt ion inequality The extent of inequality in consumption has been byandlarge less than the extent of income inequality 14

15 ( b) : Tim e Profiles of Per Capit a Mean I ncom es and consum ption in Real Per Capita Mean Real Per Capita Mean Consumption The figures of per capita household real mean income and consumption in general show rising trends. However possibly due high inflation rates the figures decline for few years. 15

16 ( C) : Tim e Profiles of Per Capit a I ncom e and Consum pt ion W elfare in Sen Welfare Index Sen Welfare Index Welfare declined till the mid 60s in rural and overall. It increased between the periods In the year , income inequality sharply rose and we find a decline in rural and overall welfare in that period. Whereas in the last year of our analysis welfare level increased in all areas due a significant increase in per capita real mean incomes in those areas 16

17 Main Findings inequality declined before East separation (196371) increased in seventies and early eighties ( ) improved in mid 80s sharply rose during ( ) improved but level remained high thereafter Consumption inequality showed the same trend till the mid 80s. After that it narrowed down and increased again during recent years. In general the distribution of consumption expenditures is less unequal than the distribution of income In general the trend in income /consumption inequalities was same in both rural and urban areas; however the level of inequalities was mostly higher in urban areas 17

18 Welfare, generally, increased over the time but the trend in welfare is almost the same as that of growth in real mean income or consumption. 18

19 THANK YOU 19

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