Polarization

Abstract

Polarization is an interesting additional social indicator for analyzing income inequality and poverty across countries, as it captures the phenomenon of ‘clustering around extreme poles'. Rising income polarization can be harmful since it is closely linked to poverty, social exclusion, social tension and social unrest. Present study emphasizes on the measurement of income polarization in Pakistan to determine the degree of this social conflict. Polarization is measured by the index provided in Bossert and Schwor (2006). Results are further decomposed over time to identify the major factors contributing to polarization in Pakistan. Pakistan Integrated Household Survey (PIHS) and Pakistan Social and Living Standards Measurement Survey (PSLM) surveys for the years 2001-02, 2004-05 and 2007-08 are utilized for the sake of empirical analysis. The results reveal that the polarization increased from 2001-02 to 2004-05 and then it decreased from 2004-05 to 2007-08.