Decomposing Distributional Changes in Pakistan

This paper quantifies the contributions to distributional changes observed in Pakistan over the last decade. In contrast to methods that focus on aggregate summary statistics, the method adopted in this paper generates entire counterfactual distributions to account for the contributions of demographics, labor and non-labor incomes in explaining poverty reduction. The results show that the most important contributor was the growth in income. Moreover, this growth in income seems to be driven by returns to individual and household endowments, pointing to productivity increases as the driving force behind poverty reduction. Lower dependency ratios, transfers and remittances also contributed to poverty reduction, albeit to a smaller extent. Growth in productivity, particularly between 2001-02 and 2005-06 is consistent with estimates from aggregate accounts, which points to productivity growth led by movements of labor force away from agriculture and into industry and services. If the objective is to reach similar or accelerated poverty reduction and productivity growth going forward, increased investment in rural areas will be needed.

Bibliographic Details

Main Authors:	Inchauste, Gabriela, Winkler, Hernan
Language:	English en_US
Published:	World Bank, Washington, DC 2012-07
Subjects:	AGRICULTURAL SECTOR, AGRICULTURAL SELF-EMPLOYMENT, ANNUAL GROWTH, AVERAGE PRODUCTIVITY, BASE YEAR, CHANGES IN POVERTY, COMPENSATION OF EMPLOYEES, CONSUMPTION PER CAPITA, CONSUMPTION POVERTY, COUNTERFACTUAL, DECLINE IN POVERTY, DECOMPOSITION METHODOLOGY, DEMOGRAPHIC EFFECTS, DEVELOPING WORLD, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DEVELOPMENT REPORT, DEVELOPMENT RESEARCH, DISTRIBUTIONAL CHANGES, ECONOMETRICS, ECONOMIC GROWTH, ECONOMIC INEQUALITY, ECONOMIC SECTORS, EDUCATION LEVEL, EMPIRICAL REGULARITIES, EMPLOYMENT IN AGRICULTURE, ENDOGENOUS VARIABLES, EQUATIONS, ERROR TERMS, EXOGENOUS VARIABLES, FAMILY MEMBERS, FARM ACTIVITIES, FARM ACTIVITY, FARM HOUSEHOLDS, FARM SECTOR, FARM WORKERS, FARMERS, GDP, GDP PER CAPITA, GINI COEFFICIENT, GROWTH PERFORMANCE, HEAD COUNT RATIO, HIGH VOLATILITY, HIGHER INEQUALITY, HOUSEHOLD HEAD, HOUSEHOLD HEADS, HOUSEHOLD INCOME, HOUSEHOLD INCOMES, HOUSEHOLD SIZE, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSING, HUMAN CAPITAL, IMPROVING PRODUCTIVITY, INCOME, INCOME DISTRIBUTION, INCOME DISTRIBUTIONS, INCOME GROWTH, INCOME INEQUALITY, INCOME LEVELS, INCREASED INVESTMENT, INDUSTRIAL SECTOR, INEQUALITY, INTERNATIONAL ORGANIZATIONS, LABOR FORCE, LABOR MARKET, LAND HOLDINGS, MARGINAL VALUE, MEAN VALUE, NATIONAL ACCOUNTS, NORMAL DISTRIBUTION, PER CAPITA GROWTH, PER-CAPITA INCOME, POLICY IMPLICATIONS, POLICY PERSPECTIVE, POLICY RESEARCH, POLITICAL ECONOMY, POOR, POVERTY CHANGE, POVERTY CHANGES, POVERTY DECLINE, POVERTY DYNAMICS, POVERTY GAP, POVERTY HEAD, POVERTY INDICATORS, POVERTY INDICES, POVERTY MEASURES, POVERTY OUTCOMES, POVERTY RATE, POVERTY RATES, POVERTY REDUCING, POVERTY REDUCTION, PRIVATE TRANSFERS, PRODUCTIVITY GROWTH, PRODUCTIVITY INCREASES, RANDOM VARIABLES, REAL GDP, REDUCING POVERTY, REDUCTION IN POVERTY, REDUCTION OF POVERTY, REGIONAL DISTRIBUTION, REGIONAL ECONOMIES, REGIONAL POVERTY, REGIONAL STRUCTURE, RELATIVE IMPORTANCE, RELATIVE PRICES, RURAL, RURAL AREAS, RURAL INCOME, SECTORAL COMPOSITION, SOCIAL ASSISTANCE, SOCIAL SECURITY, TOTAL OUTPUT, URBAN AREAS, VALUE ADDED, WAGES,
Online Access:	http://documents.worldbank.org/curated/en/2012/07/19309507/decomposing-distributional-changes-pakistan https://hdl.handle.net/10986/17882
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