Transition of poverty in Pakistan: Evidence from the longitudinal data

Abstract

This paper quantitatively investigates transition of poverty in Pakistan using two-period panel data set of Pakistan Socio-economic Survey. Empirical results show that the incidence, intensity, and severity of poverty have increased over time. This analysis also identifies 'the absolute poor', 'the transitory poor', and 'the non-poor', and suggests that 'the absolute poor' households have increased significantly over time. The poverty transition portrays that about one-quarter of the households remain poor, while approximately fifty percent households remain non-poor. Analysis of poverty entries and exits over these two periods show that many households enter poverty while fewer households exit from poverty. The analyses also suggest that transition of poverty is closely related to socio-economic dimensions of the households such as school enrolment, child labour, employment status of the head of the household, and indebtedness of the households. The main message that emerges from this study is that poverty reduction should focus on the extremely vulnerable households, and should try to reduce entry into poverty while increasing exit from poverty.