Estimation of distribution of income in Pakistan, using micro data

Abstract

Pakistan is one of the countries which experienced a very high growth rate in the 1960s without the benefits going to the majority of the population. So growth together with distribution became the goal. Numerous studies have been conducted related to the distribution of income in Pakistan. The main aim of this study is to find the distribution of overall income, as well as income in the four provinces of Pakistan, as broken down to the rural urban levels. The indices used to calculate the degree of inequality include Gini Coefficient, Coefficient of Variation, Standard Deviation of Logs of Income, Theil's Index, and Atkinsons' Index. HIES grouped as well as micro data are used to calculate relevant measures of inequality. In case of Gini Coefficient, it is calculated using both households and individuals as frames of references. The calculated, indices show more inequality in Sindh, particularly in the rural areas, as compared to other provinces of Pakistan. The inequality falls substantially when persons rather than household data are used as the income-receiving unit. This phenomena is observed in all provinces but more so in Sindh, particularly in urban Sindh.