Javascript must be enabled to continue!

Does Fiscal Decentralisation Matter for Poverty and Income Inequality in Pakistan?

View through CrossRef

This study endeavours to investigate the impact of fiscal decentralisation on the welfare concerns of poverty, and income inequality in Pakistan for the time period 1972 to 2013. In order to capture the multi-dimensional nature of fiscal decentralisation, three indicators are used namely; revenue decentralisation, expenditure decentralisation and composite decentralisation. Further, the role of institutional quality is also incorporated in apprehending the responsiveness of welfare issues towards the process of fiscal decentralisation. The estimation technique of Generalised Method of Moments (GMM) is employed for estimating the impact of fiscal decentralisation on poverty and income inequality. The empirical findings suggest that fiscal decentralisation has discretely resulted in increasing poverty and income inequality in Pakistan, but the presence of better institutional quality along with fiscal decentralisation can promise to mitigate the negative consequences of fiscal decentralisation for poverty and income inequality in Pakistan. Although, the indirect effect of fiscal decentralisation on welfare concerns, through institutional quality exhibits a fluctuating trend over time, but its average marginal effect is lower than the direct effect of fiscal decentralisation on welfare concerns. Hence, it can be perceived that the log-run welfare issues can be tackled effectively in the presence of institutional quality with a rational level of fiscal decentralisation. Also in order to reap the potential benefits of fiscal decentralisation for poverty and income inequality that has remained a catastrophe in case of Pakistan. JEL Classification: I3, 023 H53 Keywords: Fiscal Decentralisation, Welfare

Pakistan Institute of Development Economics

Sehrish Shahzad Bushra Yasmin

The Pakistan Development Review

Title: Does Fiscal Decentralisation Matter for Poverty and Income Inequality in Pakistan?

Description:

This study endeavours to investigate the impact of fiscal decentralisation on the welfare concerns of poverty, and income inequality in Pakistan for the time period 1972 to 2013.

In order to capture the multi-dimensional nature of fiscal decentralisation, three indicators are used namely; revenue decentralisation, expenditure decentralisation and composite decentralisation.

Further, the role of institutional quality is also incorporated in apprehending the responsiveness of welfare issues towards the process of fiscal decentralisation.

The estimation technique of Generalised Method of Moments (GMM) is employed for estimating the impact of fiscal decentralisation on poverty and income inequality.

The empirical findings suggest that fiscal decentralisation has discretely resulted in increasing poverty and income inequality in Pakistan, but the presence of better institutional quality along with fiscal decentralisation can promise to mitigate the negative consequences of fiscal decentralisation for poverty and income inequality in Pakistan.

Although, the indirect effect of fiscal decentralisation on welfare concerns, through institutional quality exhibits a fluctuating trend over time, but its average marginal effect is lower than the direct effect of fiscal decentralisation on welfare concerns.

Hence, it can be perceived that the log-run welfare issues can be tackled effectively in the presence of institutional quality with a rational level of fiscal decentralisation.

Also in order to reap the potential benefits of fiscal decentralisation for poverty and income inequality that has remained a catastrophe in case of Pakistan.

JEL Classification: I3, 023 H53 Keywords: Fiscal Decentralisation, Welfare.

Related Results

Drivers of Income Inequality in Ireland and Northern Ireland

The distribution of income differs in Ireland and Northern Ireland. Historically, Northern Ireland has been marked by lower levels of income and lower income inequality. The Gini c...

Income Inequality and Advanced Democracies

Over the past several decades, social scientists from a wide range of disciplines have produced a rich body of scholarship addressing the growing phenomenon of income inequality ac...

Why Do Indians Experience Less Happiness Than Pakistanis?

This study explores the enigma of happiness inequality between India and Pakistan, despite India’s economic prowess. Employing inequality regression models, the study pinpoints cru...

Decomposition of Changes in Poverty Measures: Sectoral and Institutional Considerations for the Poverty Reduction Strategy Paper of Pakistan

Two extremely significant empirical questions on the relationship between growth, distribution and poverty have remained the focus of attention for researchers and academicians. Fi...

Income inequality and environmental degradation in the provinces of Iran

Background: Despite the detrimental environmental and distributional effects of economic activity in Iran, these effects are not uniform across provinces. Environmental degradation...

Infectious Disease as a Mechanism Linking Health and Income Inequality

Abstract BackgroundWithin-country inequality has been rising worldwide rapidly since the 70s. An extensive literature has examined the effect of inequality on health, findi...

The Effect of the Liberian Government’s Taxation Policies on Poverty and Inequality

Many low- and middle-income countries engage in tax policy reforms. This is usually motivated by efforts to increase tax revenue collection, and also sometimes to improve equity by...

Regional Nexus of Economic Growth, Income Inequality and Poverty

This study divides Aceh Province into three distinct regional to investigate the nexus between economic growth, income inequality, and poverty from 2011-2021. Applying the Granger ...