Abstract
Changes in the extent of poverty are affected not only by
growth in the mean income but also by changes in the distribution of
income. The effect of these two factors can be separately measured by
decomposing the total change in poverty. In this context, this paper
uses new tools to quantify relative contribution of growth and
inequality using the latest available household survey data. The
findings of this paper suggest that the role of inequality remained
important in mitigating the adverse effects of growth on poverty during
the first period, 1998- 99 to 2001-02. Alternatively, the role of growth
has been fundamental in reducing absolute poverty in the second period,
2001-02 to 2004-05. Poverty would have been further reduced, had the
distribution not worsened during this period. The policy implication is
that while pursuit of growth as a strategy is important for poverty
reduction in Pakistan, the contribution of redistribution in favour of
the poor should not be ignored if the effect of growth on poverty
reduction is to be enhanced. Thus, the major challenge is to pursue a
poverty reduction strategy that is based on growth with redistribution.
JEL classification: I300, I320, O150, O400 Keywords: Poverty,
Inequality, Economic Growth, Pakistan
Publisher
Pakistan Institute of Development Economics (PIDE)
Subject
Development,Geography, Planning and Development
Cited by
6 articles.
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