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Type Journal Article - Journal of Social and Economic Development
Title The study of urban poverty in Pakistan: inference from cointegrated regression (1964-2006)
Volume 13
Issue 2
Publication (Day/Month/Year) 2011
URL http://go.galegroup.com/ps/anonymous?id=GALE|A253535292&sid=googleScholar&v=2.1&it=r&linkaccess=full​text&issn=09725792&p=AONE&sw=w&authCount=1&isAnonymousEntry=true
This paper attempts to estimate the impact of economic growth and income inequality on poverty in the specific context of urban Pakistan. The study first attempts to investigate whether there is a long-run relationship between urban poverty and economic growth in Pakistan using a Johansen cointegration framework and then proceeds to estimate the long-run and short-run effects of economic growth and income inequality on poverty. Robust elasticity estimates of urban poverty for Pakistan are derived using consistent time-series data from 1964-2006. The study also uses a powerful modeling procedure, ie, Dynamic OLS (DOLS) estimators in cointegrated regression models. In addition, impulse response function (IRF) and variance decomposition techniques are used for forecasting which examine the effect of economic growth and income inequality on urban poverty over a 10 year-period. Estimated results are quite robust not only in terms of statistical powers, but also in terms of economic instinct. The results suggest the following conclusions: Poverty and growth are non-stationary series; they are co-integrated and poverty retention ratio is 0.704 (DOLS). The post-reform period is observed with the estimated coefficient of the dummy variable (DUM) which brings down urban poverty significantly. The results imply that urban poverty in Pakistan has increased, reflecting the deprived performance of federal policies on pro-poor reforms in Pakistan. Additionally, the study has understandable practical implications for estimating the long-run and short-run elasticities in poverty function in general, and in an open variety of fields. Introduction There is still no consensus on the definition of urban poverty but two broad complementary approaches are established, i.e., economic interpretations and anthropological interpretations. Economic interpretations use a wide range of social indicators--such as life expectancy, infant mortality, nutrition, the proportion of the household budget spent on food, literacy, school enrolment rates, access to health clinics and drinking water--to classify poor groups against a common index of material welfare. Alternative interpretations developed largely by rural anthropologists and social planners working with rural communities in the third world allow for local variation in the meaning of poverty, and expand the definition to encompass perceptions of non-material deprivation and social differentiation (see Wratten 1995, Satterthwaite 1995). Similarly, Becker et al (1994) conclude that urbanisation has a dual impact on the development of an economy.

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