Poverty and Its Correlates in Pakistan

Abstract

The study estimates the poverty rates- headcount ratio, poverty gap and squared poverty gap which are 15.41, 2.4 and 0.58 % in Pakistan. The analysis at regional level depicts that all of the estimates are higher in rural areas as compared to urban ones, whereas the analysis at provincial level reveals that it highest in Baluchistan and the lowest in Punjab. The study also estimates the inequality index and the results reveal that there is increase in inequality following all of the inequality measures- Generalized entropy, Atkinson index and Gini coefficient. The analysis over time reveals that there is increase in poverty between 2010-11 and 2011-12, but it is not statistically significant.  The study decomposes the change in poverty into growth and redistribution components to find their roles towards poverty by applying the techniques of Ravallion (1992) and Kakwani (1997) between the period 2010-11 and 2011-12. The results of both techniques depict that although the growth component contributed to decrease poverty, the adverse redistribution effect was dominant enough to offset the effects of the former on poverty resulting in increase in poverty.The analysis at regional level over time shows that in the urban areas, the growth components (Ravallion as well as Kakwani) were negative and strong enough to offset the adverse redistribution effect (Ravallion and Kakwani) on poverty, resulting in a reduction in poverty. But in rural areas both growth components were positive and dominant enough tocontribute to arise in poverty.Furthermore, the results depict that the poor, the females and the rural areas were the most affected in term of   enrolment, education, gender parity index, immunization,pre/post-natal services, family planning etc. Moreover, the results of OLS regression reveal that the most important variables affecting poverty favorably are education, domestic/foreign remittances, social benefits (pension or other financial benefits), computer/property/livestock ownership, whereas the dependency ratio, household size and number of unemployed persons affect it adversely. At a policy level it is suggested that government should make arrangements for education especially for the poor, females and rural areas. The system of pension should be continued in public sector and get it introduced in the private sector as well. The government should focus on finding overseas employment to increase foreign remittances and introducing family planning incentives to reduce household size and dependency ratio especially for the poor and rural areas. Further public works programsshould be initiated and government hospitalsalong with arrangements for medicine and availability of doctors in these hospitals should be established nearest to the population especially in the rural areas.