Economics at your fingertips  

Income inequality, remittances and economic wellbeing in rural Pakistan: linkages and empirical evidence

Khadija Shams () and Alexander Kadow ()
Additional contact information
Khadija Shams: University of Glasgow

Asia-Pacific Journal of Regional Science, 2020, vol. 4, issue 2, No 11, 499-519

Abstract: Abstract This paper uses data from a rural household survey in 2008 of 600 sample households to describe the sources of income and its contribution to inequality in Pakistan. Interestingly, transfer income from remittances from within and outside the country is the highest source of income for rural households. This is followed by other sources of income from agricultural, nonfarm, livestock and rental incomes. Income distributions by these sources are calculated by quintiles. Furthermore, decomposition of overall inequality (measured by Gini coefficient) is calculated by sources of income and by provinces and districts. Partial correlation coefficients between Gini coefficients and sources of income are calculated by districts. Finally, a regression model is estimated to determine the nature and magnitude of the effects of relative income levels (measured as economic wellbeing) of households on the shares of remittances in their total household income. The household economic wellbeing contributes significantly and positively to the shares of remittances in the total household income. In general, different sources of income contribute differently to inequality with strong distributional implications. In particular, the contribution of remittances, among others, can be singled out as a major source of income and reduction in income inequality. Our results show that there is a unidirectional causality running from economic wellbeing to remittances and from remittances to income inequality. One of the limitations of our study is the static perspective of the dataset that do not consider changes over time. Second, it is a micro-level study that does not consider changes at a broader perspective. We suggest that similar studies should also be conducted in other regions, for different time periods and at a broader scale or macro-level to develop the subject. Last, it would be nice to look at the consumption and wealth-stock side of economic wellbeing, an issue we do not tackle because of data reasons.

Keywords: Income inequality; Remittances; Economic wellbeing; Rural Pakistan (search for similar items in EconPapers)
JEL-codes: I31 I39 O15 R23 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
https://www.springer ... cience/journal/41685

DOI: 10.1007/s41685-020-00151-x

Access Statistics for this article

Asia-Pacific Journal of Regional Science is currently edited by Yoshiro Higano

More articles in Asia-Pacific Journal of Regional Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2021-01-16
Handle: RePEc:spr:apjors:v:4:y:2020:i:2:d:10.1007_s41685-020-00151-x