Prevalence of Relative Poverty in Pakistan

The conceptual basis of poverty in Pakistan remained limited to absolute notion of poverty which has been criticised on the grounds that it minimises the range and depth of human needs. The paper broadens the discussion on poverty and poverty measurement by examining the prevalence of relative poverty in Pakistan. Based on the moderate relative consumption poverty line of Rs 775 per capita per month, the prevalence of relative poverty was at 40.7 percent in 2001-02. On the other hand, half of the population was below the income-based moderate relative poverty line, implying that 77.5 million individuals were poor in Pakistan. At the province level, the results suggest the highest prevalence of urban poverty in the NWFP, followed by Sindh, Balochistan, and Punjab. On the other hand, rural Sindh was the poorest region in the country, followed by the NWFP and Balochistan. The trends implied by the concept of relative poverty suggest a more rapidly increasing trend in relative poverty because of rising income inequality. As a result, gains in income accrued to the richest at the expense of the poorest and the middle income groups, implying that the rich got richer and the poor got poorer over the last 15 year. These results suggest that adverse distributional outcome may be due to the pursuance of stabilisation and adjustment programmes within the framework of the “Washington Consensus” which put too much emphasis on removing macroeconomic imbalances and enhancing economic growth while giving no consideration to equity and poverty. While economic growth alone is not enough for poverty reduction, there is a need to raise PRSP spending in order to pursue an effective poverty reduction strategy with a focus on redistributive policies. While the country has already made a commitment to attain the Millennium Development Goals, economic policies need to be expansionary. Poverty reduction strategy should be based on the policies of building up the assets of the poor and increasing the demand for those assets. An expansion of health and education for the low-income households and measures that increase the relative prices of agricultural commodities and the wages of unskilled labour should be part of new poverty reduction strategy. Focusing on agrarian strategies, especially those also favouring rural industrialisation, can lead to more egalitarian growth. Rapid expansion of labour-intensive exports may contribute to faster growth in employment. Policies to support this should favour labour-intensive techniques, e.g., by not subsidising capital and by securing more credit for small enterprises.

Role of Growth and Inequality in Explaining Changes in Poverty in Pakistan

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.Poverty, Inequality, Economic Growth, Pakistan

Trends in Inequality in Pakistan between 1998-99 and 2001-02

Although there has been a much debate on poverty in Pakistan in recent time, the discussion on inequality remained limited. Poverty and inequality are closely linked—for a given mean income, the more unequal the income distribution, the larger the percentage of the population living in income poverty. Thus, incomes at the top and in the middle of the distribution may be just as important to us in perceiving and measuring poverty as those at the bottom. It is, thus, important to monitor the whole income distribution rather than merely the bottom of distribution. The issue of income inequality in Pakistan has been important in the policy discussions since the early 1960s. Since then, a number of attempts have been made to estimate the income or expenditure inequality using the Household Income and Expenditure Survey (HIES) data. However, a perception of increasing absolute poverty in Pakistan has shifted the focus of studies from inequality (or relative poverty) to absolute poverty. Consequently, a number of attempts have been made by various authors/institutions to estimate the poverty in Pakistan in the 1990s. The debate on trends in poverty during the 1990s—an era of stabilisation and structural adjustment has been wide-ranging in Pakistan. However, there is no discussion on the changes in income distribution from the policy and institutional reforms. World Bank (2003); FBS (2001) and Kemal (2003) are only three exceptions. While the former two studies report Gini Coefficients in their studies on absolute poverty in Pakistan without explaining its variations over time, the latter study is a comprehensive review on the income distribution in Pakistan. It is this context that guided the author to evaluate the trends in inequality in Pakistan using the most recently available household data sets—PIHS 1998-99 and 2001-02. The results for the year 2001-02 are being presented for the first time, which should be useful to

Nonadiabatic Time-Dependent Spin-Density Functional Theory for strongly correlated systems

We propose a nonadiabatic time-dependent spin-density functional theory (TDSDFT) approach for studying the single-electron excited states and the ultrafast response of systems with strong electron correlations. The correlations are described by the correlation part of the nonadiabatic exchange-correlation (XC) kernel, which is constructed by using some exact results for the Hubbard model of strongly correlated electrons. We demonstrate that the corresponding nonadiabatic XC kernel reproduces main features of the spectrum of the Hubbard dimer and infinite-dimensional Hubbard model, some of which are impossible to obtain within the adiabatic approach. The theory may be applied for DFT study of strongly correlated electron systems in- and out-of-equilibrium, including the important case of nanostructures, for which it leads to a dramatic reduction of necessary computational power

On the Migration Decision of IT-Graduates: A Two-Level Nested Logit Model

Discrete choice models are used to investigate the individual’s choice among a discrete number of alternatives. The characteristics of each alternative, by means of a multinomial and nested multinomial models have been taken into account. Specifically, this study analyses the impact of choice specific characteristics (attributes) in a model of choice between different country locations. Individual IT-Graduates are assumed to choose a single type of move, stayhome or go-abroad, while simultaneously choosing a country of their choice. We demonstrate that a nested logit model is appropriate on both theoretical and empirical grounds. The sample consists of 1,500 IT-Graduates from Pakistan. The results show a high migration propensity for foreign destinations. While comparing the direct elasticities (at branch level) of home with the foreign destination types we observe that the economic factors such as self-employment and higher career position show greater effects than the sociopolitical as well as institutional factors (social networks and residence permit). A location comparison between the destinations Germany and USA/Canada (of the cross elasticities) shows that the magnitude of the values of elasticities are found to be higher for North American countries than for Germany. This suggests that IT-Graduates evaluate the factors self- employment, higher career positions, social networks and residence permit more important and significantly higher for North American destinations than for Germany. In addition we find a strong evidence for a competition between countries for high potentials from Pakistan. ZUSAMMENFASSUNG - (Migrationsentscheidung von IT-Hochschulabsolventen: Ein zweistufiges Nested-Logitmodell) Mit Hilfe von Modellen für diskrete abhängige Variablen untersuchen wir die individuelle Auswahl aus einer Anzahl von Alternativen bei der Migration. Die Charaktaristika der einzelnen Alternativen im Zusammenhang von Multinomial bzw. Nestedmodellen sind berücksichtigt worden. Wir untersuchen den Einfluss von auswahlspezifischen Charaktaristika in einem Modell zur Auswahl zwischen verschiedenen Empfängerländern. IT-Hochschulabsolventen wählen ausgehend von zwei Alternativmöglichkeiten (Migration oder im Land bleiben), eine Alternative aus und wählen simultan ein bestimmtes Land. Es zeigt sich, dass ein "Nestedlogit-modell" sowohl in theoretischer als auch in empirischer Hinsicht für die Untersuchung am besten geeignet ist. Die Stichprobe besteht aus ca. 1500 IT-Hochschulabsolventen aus Pakistan. Die Ergebnisse zeigen eine höhere Neigung auf, ein ausländisches Land zu wählen. Beim Vergleich der Direktelastizitäten für die erste Stufe beobacten wir für die Faktoren Selbstständigkeit und gute Karrieremöglichkiten einen höheren Einfluss als für die gesellschaftspolitische Determinaten (Soziale Netzwerke und Aufentshaltserlaubnis). Bei einem Standortvergleich zwischen Deutschland und dem klassischen Immigrationsland USA (basiert auf Kreuzelastizitäten) zeigt sich ferner, dass das Ausmaß der Elastisitätenwerte höher für Nordamerikanischen Länder ist als für Deutschland. Dies bedeutet, dass die ITHochschulabsolventen die Faktoren: die Selbstständigkeit, gute Karrieremöglichkeit, soziale Netzwerke und Aufenthaltserlaubnis für die Nordamerikanischen Länder signifikant höher bewerten als für Deutschland. Zusätzlich finden wir eine Evidenz für die Existenz von Wettbewerb zwischen Ländern für die IT-Hochschulabsolventen aus Pakistan.international migration, push- and pull factors, nested model

The decision to migrate: A simultaneous decision making approach

Discrete choice models are used to investigate the individual’s choice among a discrete number of alternatives. The characteristics of each alternative, by means of multinomial and nested multinomial models, have been taken into account. Specifically, this study analyses the impact of choice-specific characteristics (economic and socio-political attributes) in a model of choice between different country locations. Individual IT-graduates are assumed to choose a single type of move, stay-home or go-abroad, while simultaneously choosing a country of their choice. We demonstrate that a nested logit model is appropriate on both theoretical and empirical grounds. The sample consists of 1,500 IT-graduates from India. The results show on the one hand a high migration propensity for foreign destinations and on the other hand a quite large number of IT-Graduates who want to stay at home. By comparing the direct elasticities (at branch level) of home with those of foreign destination types we observe that both the economic as well as socio-political factors tend to have a greater impact for the foreign destinations. Based on the cross elasticities values, a location comparison between the destinations Germany and the USA/Canada shows that the magnitude of the values of elasticities are found to be higher for North American countries than for Germany. This suggests that IT-Graduates evaluate the economic as well as the socio-political factors as more important and significantly higher for North American destinations than for Germany. In addition we find strong evidence for a competition between countries with high potentials, with India emerging as an attractive location. -- Mit Hilfe von Modellen für diskrete abhängige Variablen untersuchen wir die individuelle Auswahl aus einer Anzahl von Alternativen bei der Migration. Die Charakteristika der einzelnen Alternativen im Zusammenhang von Multinomialbzw. Nestedmodellen sind berücksichtigt worden. Wir untersuchen den Einfluss von auswahlspezifischen Charaktaristika (ökonomische u. sozio-politische) in einem Modell zur Auswahl zwischen verschiedenen Empfängerländern. ITHochschulabsolventen wählen ausgehend von zwei Alternativmöglichkeiten (Migration oder im Land bleiben), eine Alternative aus und wählen simultan ein bestimmtes Land. Es zeigt sich, dass ein „Nested-Logit-Modell“ sowohl in theoretischer als auch in empirischer Hinsicht für die Untersuchung am besten geeignet ist. Die Stichprobe besteht aus ca. 1500 IT-Hochschulabsolventen aus Indien. Die Ergebnisse zeigen einerseits eine höhere Neigung, ein ausländisches Land zu wählen, und andererseits tendiert eine große Anzahl von IT-Hochschulabsolventen, in der Heimat zu bleiben. Beim Vergleich der Direktelastizitäten für die erste Stufe beobachten wir für beide ökonomische und sozio-politische Faktoren einen höheren Einfluss auf die Entscheidung, ins Ausland zu gehen. Bei einem Standortvergleich zwischen Deutschland und dem klassischen Immigrationsland USA/Canada (basierend auf Kreuzelastizitäten) zeigt sich ferner, dass das Ausmaß der Elastizitätswerte höher für nordamerikanische Länder ist als für Deutschland. Dies bedeutet, dass die ITHochschulabsolventen die ökonomischen und sozio-politischen Faktoren für die nordamerikanischen Länder signifikant höher bewerten als für Deutschland. Zusätzlich finden wir Evidenz für die Existenz von starkem Wettbewerb zwischen Ländern um die IT-Hochschulabsolventen aus Indien, das selbst als ein attraktiver Standort gilt.

Trends in Absolute Poverty in Pakistan: 1990-91 and 2001

Poverty, defined comprehensively as absence of options to shape one’s life according to one’s own preferences, comes closer to the concept of human development as presented in UNDP’s Human Development Reports. Absolute poverty, on the contrary, defines poverty in terms of satisfaction of minimum physical needs of food and non-food items to enable people at the lower end of income distribution to engage in economic activity. From the vantage point of the policy-maker concerned with alleviation of poverty, it is crucial to know the magnitude of the existing level of poverty and identify the policy determinants of poverty as well as constraints standing in the way of an effective attack on the worst forms of absolute poverty. In Pakistan, like many other developing countries, poverty has emerged as a core issue on the policy agenda. The traditional measures of poverty—headcount, severity and poverty gap indicate that the incidence of poverty during the previous decade have shown no sign of poverty abatement despite numerous policy and institutional initiatives undertaken by the government. The debate on trends in poverty during the 1990s—an era of stabilisation and structural adjustment has been wide-ranging in Pakistan. However, there is no consensus on the poverty outcomes from the policy and institutional reforms. Primarily due to non-availability of basic data, the last year for which poverty estimates are available is 1998-99. In view of the need to monitor poverty trends and continuously evaluate the efficacy of policies adopted by the government under the poverty reduction strategy, it is important to evolve a consensus on the use of a consistent poverty line, sources of data and data adjustments for measuring poverty. It is this policy context that has guided us to use a consistent definition of poverty line.