WELFARE IMPLICATIONS OF ECONOMIC GROWTH: AN EMPIRICAL ASSESSMENT FOR PAKISTAN

Abstract

Purpose of the study: GDP Growth does not necessarily bring improvements in the lives of people belonging to lower social strata. The objective of this study is to analyse the welfare implications of economic growth in Pakistan. We aim to investigate that to what extent economic growth has been successful to bring improvements in the welfare of the poor segments of the society. Methodology: By using the data of different waves of Household Integrated Economic Survey (HIES), Pakistan Integrated Household Survey (PIHS), Pakistan Social and Living Standards Measurement (PSLM) Survey over the period of 1990-2017, we have done an analysis of income shares received by different income groups. We have also constructed Ahluwalia-Chenery Equal Weighted and Poverty Weighted Welfare Indices (Ahluwalia and Chenery, 1974). In order to analyse the welfare implications of economic growth in the country, these indices have been compared with another index termed as Income Weighted Index (IWI). Main Findings: Empirical results indicate that substantial income gaps exist among different income groups. In the absence of an effective fiscal policy, these gaps do not seem to be narrower.