Zakat and Inequality: Some Evidence from Pakistan

Geoffrey Jehle

No 28, Vassar College Department of Economics Working Paper Series from Vassar College Department of Economics

Abstract: This paper presents empirical evidence on the extent to which zakat---a form of religiously-mandated charity under Islam---achieves its intended objective in Pakistan. Detailed income and expenditure data from Pakistan's Household Income and Expenditure Survey for 1987-88 are used to construct two income distributions---one containing the distribution of income which would have obtained if relevant forms of charity were not given, and one containing the distribution of income which obtains under a regime in which such charitable giving takes place. Atkinson-Kolm-Sen (AKS) ethical relative indices of income inequality are computed for Pakistan and each of its four provinces, for each of these two income distributions, and are compared over a range of parameter values. Evidence is found that zakat does redistribute from the better off to the worse-off, and so achieves some reduction in measured income inequality in Pakistan. Both intra-province and inter-province components of over-all inequality decline, though the amount of change is generally small. These conclusions are shown to be robust to a wide range of normative values the investigator may bring elect.

Date: 1993-11
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Citations: View citations in EconPapers (7)

Published in Review of Income and Wealth, June 1994, 40(2): 205-16.

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Journal Article: ZAKAT AND INEQUALITY: SOME EVIDENCE FROM PAKISTAN (1994)
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