Econometric Analysis of Personal Income Disparity in Pakistan

Abstract

The prime objective of this research paper is to present econometric analysis of income distribution pattern of Pakistan in three folds like overall, provincial and regional. This empirical paper present trends and then compare it with two different micro level data sets that either inequality is decreasing or increasing. We are not interested that either inequality increasing or decreasing. However, our focused to identify economic and social factors are important in which inequality is increasing or decreasing. For this purpose, we have taken some characteristics like Education level of the household, Family size and different income groups. In this descriptive study, we decomposed the data into different level like provincial and regional. Later on, Education of the household was divided into different level of classes and check it whether in which class inequality more or less exist. Similarly, family size was sub divide into three groups, lower, middle and high composition family members. Lastly, overall income was divided into decile and measure disparity. In empirical analysis, we used three different indices for inequality determine i.e. Gini, Atkinson and Generalized Entropy. Latest rounds of Pakistan Social Living Measurement (PSLM/HIES) data 2015-16 and 2018-19 was undertaken. The basic theme of this study to contribute in planning and policy level studies of Pakistan wherein social and economic condition of the citizen improved.