Poverty and Inequality During the Adjustment Decade: Empirical Findings from Household Surveys

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This paper investigates the dynamics of poverty and inequality in Pakistan over the period 1988-1999. The year 1988 was the year of the first formal Structural Adjustment Lending (SAL) from the World Bank and the IMF. Thus, this analysis facilitates the debate regarding the impact of SAL on household welfare and poverty. This is done by analyzing changes in poverty and inequality from two comparable household income and expenditure surveys conducted by Federal Bureau of Statistics. Our findings show an increase both in the Gini coefficient from 0.34 to 0.38 and poverty incidence from 24 to 30. The dynamic decomposition of the poverty index indicates the relative importance of growth and redistribution effects in explaining the changes in poverty. The analysis reveals that increase in poverty can mainly be attributed to low economic growth during the decade especially in rural areas.