CROSS SECTIONAL TRENDS AND DYNAMICS OF ECONOMIC INEQUALITY IN PAKISTAN

Poverty reduction is twin to growth rate and variation in the distribution of income across the population. The tapered off growth accompanied by unfavorable income distribution aggravates the poverty incidence problem. A comprehensive estimation includes a variety of social and economic dimensions. However, this study is aimed at estimating economic inequality based on income and consumption expenditure as welfare indicators. Estimations have been made by employing Gini Coefficient on HIES data sets for the years 1998-99, 2001-02 and 2004-05, to identify the trends and dynamics of economic inequality. Results revealed that overall consumption inequality in static terms remained unchanged during the whole span of study with higher extent in urban areas while it marginally increased in dynamic aspects. On the other hand, income inequality (both in static and dynamic aspects) worsened at overall and urban levels contrary to its rural counterparts. Proportionate contribution of rural areas to overall consumption inequality has worsened contrary to income inequality. Moreover, income inequality is higher than consumption inequality at all the levels. Inter-provincial analysis showed that Punjab had highest extent and proportionate contribution to overall consumption inequality at all its levels in the initial survey year. Overall inequality dynamics revealed that consumption inequality declined only in Punjab and KPK while rural areas of all the provinces except Punjab exhibited declining trends in both consumption and income inequalities. Similar trends but with higher degree has been found in case of consumption inequality across the regions.