Income inequality in rural Pakistan-sources and decompositions

Shams, Khadija (2012): Income inequality in rural Pakistan-sources and decompositions.

Abstract

This paper analyses income inequalities in rural Pakistan. Using household survey data, we decompose income inequality according to its different sources. We calculate Gini coefficients and Theil indices both within and across provinces and districts. A partial correlation analysis extends our descriptive investigation to reveal the different impacts of the various income sources on overall income inequalities. The unique focus on rural areas and the more disaggregated (district level) approach permits more nuanced policy implications. We find that inequality between districts is higher than within districts. Non-farm and transfer income have the strongest impact on income inequality across districts both in economic and econometric terms. While the former source of income is inequality increasing, transfer income tends to reduce inequalities. Our results highlight in particular the need for factor mobility to facilitate transfer income.

• Item Type: MPRA Paper
• Language: English
• Keywords: Income inequality; Gini coefficients; partial correlation; rural Pakistan
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q15 - Land Ownership and Tenure ; Land Reform ; Land Use ; Irrigation ; Agriculture and Environment; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development

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