Inequality in Pakistan: A Social Welfare Approach

This paper presents new results on income distribution in Pakistan from an analysis of the full HIES data tapes for 1984-85, 1985-86, 1986-87, and 1987-88. An explicit social welfare methodology is adopted to measure changes in inequality at the national level, and within and across provinces, over the period. Estimated Lorenz curves for Pakistan and each of its provinces, in each of the four years, are provided, and cardinally significant Atkinson-Kolm-Sen ethical relative indices of inequality are computed. Strong evidence is found that income distribution in Pakistan improved from 1984-85 to 1987-88, and this conclusion is robust to a wide range of distributional values. Judgments on the trend in inequality over time within and across Pakistan's four provinces are shown to depend more heavily on the investigator's choice of distributional values