Trends and determinants of rural poverty: a logistic regression analysis of selected districts of Punjab.
Hashmi, Amara Amjad ; Sial, Maqbool H. ; Hashmi, Maaida Hussain 等
Poverty is widespread in the rural areas, where the people are in a
state of human deprivation with regard to incomes, clothing, housing,
health care, education, sanitary facilities and human rights. Nearly 61
percent of the country's populations live in rural areas. In
Pakistan poverty has been increased in rural areas and is higher than
urban areas. Of the total rural population 65 percent are directly or
indirectly linked with agriculture sector. In Pakistan more than 44.8
percent people generate their income from agriculture sector, and the
higher rate of increase in poverty in the rural areas has provoked
debate on growth and productivity trends in the agriculture sector.
Therefore, it is the need of the hour to determine such factors which
affect the poverty status of a rural household. Utilising unique IFPRI (International Food Policy Research Institute) panel data together with
sub-sample of PRHS (Pakistan Rural Household Survey) for two districts
of Punjab (Attock and Faisalabad) the present study aim at analysing and
estimating the rural poverty trends and determinants of rural poverty
from the late 1980s to 2002. The data was analysed by using binary
logistic model and head count measure. The results show that the chance
of a household tripping to poverty increased due to increase in
household size, dependency ratio, while, education, value of livestock,
remittances and farming decreased the likelihood of being a poor.
Moreover, the socio-economic opportunities as represented by the
availability of infrastructure in the residential region also play a
significant role in the level of poverty faced by a household. This
study makes a modest contribution by attempting to analyse the need for
focusing on anti-poverty policies, which can nip the evil in the bud.
JEL classification: O18, I 32
Keywords: Rural Poverty, Poverty Trends, Agriculture Growth,
Determinants
I. INTRODUCTION
Poverty has many dimensions, like malnourishment, no shelter, being
ill and not having ability to visit a doctor, no facility to go to
school, unemployment, uncertainty of tomorrow, surviving only one day at
a time. Poverty is losing a kid to illness due to the infected water.
Powerlessness, lack of representation and freedom is another name of
poverty. Poverty is of many types varying from place to place and time
to time, and, has been portrayed in various manners. Poverty is the
"incapability to maintain a minimum living standard anticipated
with respect to basic consumption needs or some amount of income
required for satisfying them [World Bank (2006)].
The bulk of the global poor are rural and will linger on thus for
numerous decades. The major portion of their expenditure is generally on
staple food. They have little assets such as land and others, lack of
schooling and face lots of interconnecting obstacles to develop.
Approximately 1.2 billion people globally expend less than a standard;
"dollar-a-day"; and are in "dollar poverty"; 44
percent in South Asia about 24 percent each in Sub-Saharan Africa and
East Asia and 32 percent in Latin America and the Caribbean. Almost 75
percent of the dollar poor lived and worked in rural areas in 2001.
Projection made in 2001 suggested that 60 percent would continue to be
in this state in 2005 [IFAD (2001)].
Pakistan's population is estimated at around 155 million, and
is growing at 1.9 percent per annum. Nearly 61 percent of the
country's populations live in rural areas. While 65 percent of the
rural population is directly or indirectly linked with agriculture
sector, it constitutes only 45 percent of their income [Pakistan
(2006)]. According to the official statistics, poverty in the rural
areas has gone down form 39 percent in 2001-02 to 28 percent in 2005-06.
[Pakistan (2006)]. However, some studies have contradicted these
contentions and argue that in contrast, the rural poverty has remained
unchanged or even been trending higher over this period or at least not
decreased as much as shown in official statistics. [Kemal (2003); Malik
(2005); World Bank (2006); Anwar (2006)]. There is also a huge disparity
in poverty incidence among rural versus urban sector of Pakistan.
According to the 2006 Economic Survey of Pakistan, poverty levels in
urban and rural areas stood at 15 percent and 28 percent respectively,
suggesting that a rural household was twice as likely to be a poor as
its urban counterpart [Pakistan (2006)].
Moreover, the rural areas have witnessed much higher rate of
increase in poverty levels than the urban areas. This has prompted a
debate on growth and productivity trends in the agriculture sector.
There is a concern regarding the apparent paradox of relatively good
reported agriculture growth accompanied by increasing level of rural
poverty during 1990s. Proportion of population below poverty line, drawn
at minimum calorific intake requirement of 2350 calories, increased from
25 percent in 1990 to 39 percent in 2001. The growth apparently did not
trickle down. A similar phenomenon was also observed during some earlier
decades in Pakistan as well, poverty increased in the 1960s despite
growth rates exceeding 6 percent [Kemal (2003)].
Overview of Rural Poverty in Pakistan
There are numerous studies, which stated poverty trends existing in
Pakistan since the 1960s [see for example, Kemal (2001); Arif and Ahmed
(2001)]. All of these studies put up with the instinctive flaws in
evaluating the poverty over time and place. But, it is feasible to draw
some general conclusion from the results of these studies. The general
consensus rising from this literature is that poverty increased in rural
areas. This occurred regardless of high growth rates in the agricultural
sector at the same time. According to Arif and Ahmed (2001) this trend
was due to the fact that the preliminary recipients of agricultural
subsidies during this period were generally large farmers. Therefore the
increased agricultural growth could not be translated into decreased
levels of poverty. During the period of the seventies and the early
eighties there was significant decrease in incidence of rural poverty.
It was the period in which private investment in agriculture was
highest. There was also a remarkable migration at domestic and overseas
level from the rural areas, resultantly, foreign remittances increased,
which oftenly has been referred as one of the main causes at the back of
the declining poverty rates during this period in the country. Since the
late 1980s however, there is consensus in the available literature and
among researchers that the, rural poverty is rising. Malik (1994, 2005);
Amjed and Kemal (1997); Ali and Tahir (1999); ADB (2002) and CRPRID
(2003).
In brief, in the 1980s rapid growth in agriculture GDP of 3.9
percent contributed to a steady decline in rural poverty from 49.3
percent in 1984-85 to 36.9 percent in 1990-91. In spite of substantial
growth in agriculture real GDP in the 1990s (4.6 percent), however,
rural poverty did not decline. Instead of, the percentage of poor was
essentially unchanged between 1990-91 (36.9 percent) and 1998-99 (35.9
percent), and may have risen slightly in 2001 to 38.9 percent. Several
factors help to explain the stagnation in rural poverty in the 1990s,
in-spite of substantial agriculture growth, including overestimates of
the livestock income growth, a rise in real consumer price of major
staples, and the skewed distribution of returns to land coupled with a
declining share of the crop sector in overall GDP [Malik (2005); Dorosh,
Niazi, and Nazli (2003)]. The following Tables show the poverty
estimates in Pakistan.
The Pakistan (2006) has stated a reduction of 10.6 percent in the
poverty incidence of the country during 2001-05, based on the latest
available household survey data by using inflation adjusted poverty line
for the year of 2004 -05. According to official estimates poverty
declines from 34.46 percent during 2001, to 23.94 percent in 2005. It
further indicates that in urban areas, the incidence of poverty reduced
from 22.69 percent during 2001, to 14.94 percent in 2005, while rural
poverty decreased 28.1 percent during 2005, compared to 39.26 percent in
2001. On the other hand, the World Bank (WB) report on Pakistan's
poverty criticise to use CPI for inflating 2000-01 poverty line and
instead suggests using the survey based prices index---Tornqvist Price
Index (TPI). Thus by utilising this methodology report declared a
poverty headcount of 29.2 percent. These results suggested a decline in
poverty of 5.2 percent between 00-01 and 04-05 rather than to 10.6
percent. The Anwar's (2006) estimates are also consistent with
World Bank estimates. According to this study poverty declines 5 percent
in the period of 2001-02-2004-05.
Thus rural poverty analysis, policy formation, implementation, and
reduction are extremely important and require redirection of attention
and expenditure towards agricultural development.
Path Ways Out of Rural Poverty
The overview indicates a substantially high prevalence of rural
poverty in Pakistan compared to the urban region. The next question
arises, what accounts for causes and persistence of high prevalence of
rural poverty in rural area. This study also attempts to address this
question.
Education of the household head, per capita acreage cultivated,
changes in household size, value of livestock owned and mean time to
services and residential region were significantly related to the
probability of being poor [Bokosi (2006)].
The main factors responsible for this outcome were found to be
favourable/ unfavourable distribution by size of landholding, household
size, educational attainment, dependency ratio, participation rates,
female-male ratio, and age of the household head. The landless households getting out of poverty, however, remained in a low income
category. Whereas our analysis highlighted the importance of
institutional setting for a better distribution of assets and access to
resources, at the same time it pointed to the fact that numerous
non-farm activities also enable the rural households to generate incomes
and thus avoid poverty [Malik (1996)].
This study explores these questions related to agricultural growth
and rural poverty trends and path ways out and in to poverty using
household panel data and secondary data sources to examine income
dynamics in four districts of Pakistan from the late 1980s to 2002.
Section II of the paper describes the data and methodology, in Section
III the results of regressions on the determinants of household Poverty
status, incorporating data on levels of infrastructure across villages
and over time, are discussed and in Section IV and last section there
are summary and policy recommendation.
II. DATA AND METHODOLOGY
The household data set used in this analysis was made up of 14
rounds of the International Food Policy Research Institute (IFPRI)
sample from 1986-87 to 199091, together with a sub-sample of panel data
households included in the 2001-02 Pakistan Rural Household Survey
(PRHS).In this analysis, the data set for Punjab province (Attock and
Faisalabad) was taken because of the time limitation. The second notable
thing was that only a sub-sample of PRHS data was used. It was noted
that 103 households that had data for all five years of the IFPRI survey
could not be traced after 11 years. The 571 household traced out after
11 years but households that have split off from the base household were
not included in this analysis. Among these 571 households, 252
households of Punjab were taken. Thus the analysis included data set of
6 years (5 years IFPRI data include, data for 200102 PRHS data) and on
average, these households were poorer than the average household that
could be traced.
Summary statistics for important variables in the dataset,
particular showed that households in this sample are poorly educated,
with 88 percent of mother's illiterate and 46 percent of children
under 15 currently enrolled, predominantly landless with 48 percent of
households reporting no land ownership and report a poverty profile that
is comparable to those obtained from the Pakistan Integrated Household
Survey, with 35.6 percent of the households falling below the poverty
line of Rs 690 per capita per month. There are also important
differences among communities in access to health care and medical
facilities--only 37.5 percent of the villages report a health facility
within 5 kms, and a portion of households (12 percent) report using
surface water (as opposed to well or piped water sources) as their
primary drinking water source.
Estimation of Poverty Trends
To estimate the trends for poverty different techniques are used,
such as Foster Greer and Thorbeck measures. But in the present study the
trends in incidence of poverty is calculated through headcount poverty
measure. This is the simplest approach to estimate the trends in
poverty, while Depth and Severity of Poverty Gap is left for future
study due to the time limitation. The other note able factor is the gap
of 11 years in the available data; because the data set is used in the
study is unique panel data, which is rarely available in Pakistan.
However the IFPRI Panel data is in exceptions. The IFPRI households
visited after 11 years in 2001-02 under the survey of the PRHS. It may
be considered as the limitation of the study. The second important point
to be noted that there is a data gap between recent years and the data
available for analysis that is why the analysis is limited up till to
2001-02.
The poverty trends are calculated for four different categories,
(2) full sample, bottom 40 percent, farmers and non-farmers. The
disaggregated analysis with respect to different categories is more
useful to understand the incidence of poverty among different groups of
households.
The correlates of poverty status are usually analysed by using
either a poverty profile or a poverty status regression. Poverty profile
explores the characteristics of the poor using a tabulation approach and
usually do not allow more than one correlate of the poor to vary
simultaneously. In contrast, poverty status gives us opportunity to
asses the correlates of poverty in a multivariate frame work [Baulch and
McCulloch (1998)].
Poverty status regressions are usually applied by using a Probit or
Logit model. In Probit or Logit model a dichotomous variable is used
which represents whether a household is poor or not. This dichotomous
variable is regressed on a set of supposed explanatory variables like
region of residence, asset ownership, household size and composition and
educational levels of households etc. Specifically certain explanatory
variables could be identified which are significantly associated with
being poor or non poor. The results of such type of poverty status are
oftenly used in policy framing. Results of poverty status indicate that
on which features policy makers should emphasised to enhance the factors
which are associated with being not poor and to reduce the factors which
are associated with being poor. When framing anti-poverty policies it
is, however, important to be careful in interpreting the results of
poverty status regression. Strictly speaking the explanatory variables
included in poverty regression should be exogenous of a household's
poverty status. Yet it is clear that poverty status regressions often
identify strong association between poverty and certain explanatory
variables (such as household size or asset ownership) which, at least in
the medium to long term, are as much consequences as the causes of
poverty. [Baulch and McCulloch (1998)]. In this study to find out the
determinants of rural poverty with the help of poverty status Logit
model was used (as reported above). Therefore it was important to
discuss Logit model in detail. Therefore it was important to discuss
Logit model in detail. A Logistic model is a univariate binary model.
For dependent variable Yi, there are only two values one and zero, and a
continuous independent variable Xi, that
[P.sub.r] ([Y.sub.i] =1)= F([x'.sub.i] b) (1)
Here is b is a parameter which needs to be estimated and F is
logistic cdf. Logit model may be preferable due to its lower computation
cost as compare to other techniques of such type. The basic formula
application of Logit model is:
[P.sub.1] = F([alpha] + [beta]xi) = 1/[1 +
[e.sup.-([alpha]+[beta]xi)]] (2)
Where xi is the probability that ith households will be poor given
Yi, where ct is a vector of explanatory variables, e is the base of
natural logarithm. Equation 2 can be written as:
Pi[1 + [e.sup.-([alpha]+[beta]xi)]] = 1 Or
[alpha]+[beta]x/=log(Pi/1 - Pi) (3)
The ratio (Pi/1 - Pi) called the log odd or Logit, which acts as
the dependent variable. This ratio will give the odd that a household is
poor. A positive sign of estimated coefficients would mean that the
probability of being poor is higher than reference category and vice
versa keeping all other characteristics constant. Putting in an other
way "A number greater than one of log odds indicates a positive
association between independent and dependent variable, while a number
between Zero and one indicates negative association among both"
[Hoffmann (2004)]. One of the major econometric problems is the
specification of the variables to identify the determinants of poverty.
As discussed before, the variable specified should be exogenous to the
households and its poverty status. This is truly difficult and complex
matter. Some poverty related variables such as amount of land owned
related to the factors that are largely exogenous to the
household's decision-making process. However other variables, for
example those which are related to the households sex ratio, education
and migration--reflect series of more or less internal choices made by
the household at some point of time. However, since the management and
taste factor should be fixed, it is not likely they will seriously
biased estimates.
Selection of Appropriate Poverty Line
One most important methodological issue is to choose the best
suitable and free of measuring error poverty line. To account for
changes in cost of living, National Poverty line of Rs 3,648 per adult
equivalent per year in 1991 was adjusted to an equivalent of Rs 8,743 in
2002 for determine poverty status among the sample household.
III. RESULTS AND DISCUSSION
This section presents empirical results based on the estimation of
econometric model and trend in rural poverty using poverty head counts,
the main objective of the econometric model was to determine the factors
affecting poverty status in the rural Punjab. Therefore the section
presents a detailed discussion on the trends in rural poverty from late
1980s to 2001-02 for four categories of households and determinants of
poverty status through logistic model. For this, logit model was
estimated for the IFPRI (International Food and Policy Research
Institute) five years panel (1986-87-1990-91) while an other logit model
was also estimated for the sub-sample of PRHS (2001-02) but the data
showed poor results that is why not shown in paper. The dependent
variable was one if the household was poor (3) and zero otherwise
Trends in Rural Poverty
The full sample results showed the general rising trend of poverty
in sample households. The poverty headcount in three years were
significantly high. In 1988-89 (48 percent), 1989-90 (46 percent) and
the 2001-02(57 percent), which was the highest. In bottom 40 percent
sub-sample the poverty incidence (poverty headcount) was highest
followed by non-farmer category. In farmer households sub-sample the
poverty incidence was comparatively less than other categories.
Over all we can conclude that rural poverty is rising in the first
five year of panel but it significantly increased in year 2001-02.
However the results of bottom 40 percent showed that poverty incident
significantly decreased in 2001-02 as compare to previous years
specially '89 and '90. The disaggregated analysis showed that
farming is an important factor to fight against poverty. On the other
hand households who were non- farmer obviously landless were facing
higher incidence of poverty. The estimates were two selected districts
of Punjab due to data limitation; hence the results are following the
general trends of poverty estimated by previous studies for national and
provincial level but showing much higher estimates of poverty than other
studies. This aspect stress to need have more disaggregated analysis at
national and provincial level, because most of the studies have done the
analysis at aggregate level accept few studies. Theses studies have done
the analysis on the basis of agro ecological zones and found a
significant difference in poverty among theses areas [see Malik (1994,
2005); Arif and Ahmad (2001) and Kemal (2003)].
Determinants of Rural Poverty
Logistic regressions on the poverty status of households for the
first period (1986- 87 to 1990-91) are similar to the results of Baulch
and McCulloch (1998) and Adams and He (1995).Coefficients on household
structure (number male and female adults, household size and dependency
ratio), education (number of males and females with primary and
secondary education), land (irrigated and non-irrigated) and capital
(tractor) are all significant at the 95 percent confidence level.
The results revealed that likelihood event of being poor were more
if a household had large number of the member (household size). There
was higher chance of being poor for a household if they had large
dependency ratio.
Where percent of male adults and female adults which were aged
between 16 to 64 has strong negative relation with poverty status. This
showed that male and female adults involved in income generation
activities; therefore they became the cause to escape from poverty.
Hence more the adults member, more the chance to escape from poverty.
That's why one can say the household characteristics and
composition play an important role to determine its poverty status.
The education variables also showed a significant negative relation
ship with poverty status. That's meant, education is vital factor
which influence the chance of being poor and not poor, there is less
(more) chance to trip into poverty (exit from poverty) if the house hold
head has primary education and the number of household members with
primary and secondary school education. One other important aspect of
this result is that the basic education both for male and female has
more strong negative impact on poverty status, because the coefficient
magnitude for primary education is greater than secondary education. On
the other hand the male education works more strongly to get out of
poverty than females education.
Owner ship of assets, such as land owned, value of live stock and
capital assets (value of tractor) were also negatively correlated with
poverty status. Rain fed land and irrigated land both showed the strong
negative association with the chance of being poor. Therefore
intuitively one can say, owner ship of land (though total acres of land
owned is not included in analysis) reduces the risk to enter in to
poverty. But the owner ship of rain fed land owned is also cause of
greater transitory poverty [see McCulloch and Baulch (2000)]. Where the
value of livestock was a vital factor among the other assets of
households. Value of livestock also negatively associated with poverty
status. A household which had a tractor was also less likely to be poor
than a household not had tractor.
The dummy for Farmer (=1 if household operating on 0.5 acres
otherwise 0) also strongly negatively correlated with poverty status.
Living in Attock which was the district with rain-fed land increased the
chance of being poor for a household. Most probably it was due to the
rain fed land which appeared as major factor of transitory poverty [see
Adams and He (1995); Baulch and McCulloch (1998); McCulloch and Baulch
(2000)].
It is useful to compare these results with results obtained by
Adams and He (1995) and Baulch and McCulloch (1998) on the same data.
But Adams and He's results consisted on the three years analysis of
the same data which was available at that time. Secondly both of results
for four districts of IFPRI panel, but study in hand can be compared
with them on the basis of the general trend of the particular variables
in the IFPRI panel and poverty correlates in Pakistan.
They also explored that dependency ratio and household size
significantly enhance the risk to trip in to poverty. Both of the
studies found that the male and female having primary and the secondary
education significantly reduced the risk poverty, where the value of
livestock also reduced the risk of poverty according to both studies.
Adams and He found that owner ship of irrigated land was significantly
eliminated the chance of living in poverty, which was also consistent
with results of the Baulch and McCulloch's dummy variable of land
ownership (though, it was not significant). Finally both of them, found
that living in Attock strongly increased the chance of being poor. All
these results were consistent with the results discussed in the present
study before.
The results of the study are also in line with the general
established economic theory. Having a large number of households is
commonly correlated with poverty status, while a high dependency ratio
decreases earning potential; in relation to needs and therefore
increases the risk of poverty [Baulch and McCulloch (1998); McCulloch
and Baulch (2000) and Sen (2003)]. Similar is the case with the
households with basic and primary education, it is widely accepted
concepts that education plays vital role to exit from poverty. In other
words education reduces the chance to fall in to poverty. Real income
showed positive relation ship with the education [see Baulch and
McCulloch (1998); McCulloch and Baulch (2000); Sen (2003); Bokosi
(2006); Bhatta and Sharma (2006)].
Land owned (irrigated and rain-fed both) and assets owner ship
(value of livestock and vehicles; like tractor) also reduced the risk of
being poor. Livestock income is the fourth important source of income
for the rural households. However the incidence of poverty is found to
be higher for those who depend solely on livestock income and lower for
those who have both farming and livestock activities. FBS (2001)
observes that a majority of the non-poor depends on crops while the poor
depend on livestock. The percentage of households that depend on both
crops and livestock is substantially higher for the non-poor. But the
livestock income worked as a shock observer in bad years of cropping
[see Baulch and McCulloch (1998); McCulloch and Baulch (2000); Malik
(2005); Adams and He (1995, 1996, 2002)].
It is important to note that the problem of endogeneity can arise
here. Prosperous household would be supposed to have higher land and
assets ownership than poor. However there is large number of transitory
poor in this data, therefore these assets can be used to smooth
consumption between good and bad years. Possibly not necessarily are
good indicators of poverty [see Baulch and McCulloch (1998); McCulloch
and Baulch (2000); Malik (2005)]. Taking the other side of the picture,
landlessness and lack of assets may be consequences rather than causes
of poverty.
IV. SUMMARY AND RECOMMENDATIONS
This study has attempted to look into rural poverty trends and
determinants of rural poverty in two selected districts if Punjab in
Punjab by using a unique five year panel data set together with the
sub-sample of PRHS from the late 1980s to 2002. The main purpose of this
study was to explore the questions related to agriculture growth and
magnitude of rural poverty and the factors, which determine the poverty
status.
The incidence of poverty showed the increasing trends of rural
poverty in panel over the periods of 16 years. The disaggregated
analysis of the households with reference to different categories
revealed that poverty incidence was highest in Bottom 40 percent
category.
Finally this study identified the factors responsible for path ways
out and in among rural households or associated with the poverty status.
For this purpose the variable associated with the poverty status and
poverty line used in this study were compared. A logistic regression model was estimated with a wide range of households characteristics
(explanatory variables) to explore the determinants of poverty status.
The results showed that the chance of a household being poor
increased due to its household size, dependency ratio and residential
district. The chance of being poor is higher for a household living in
Attock. The probability of being poor decreased with a greater number of
adults male and female members of households. More adult members mean
less poverty. The male and female having primary and secondary education
also had very strong negative relationship with poverty. The level of
the household heads basic education had also negative relationship with
poverty. This showed that education was an important factor to get rid
of poverty for a household. Where the household assets such as land
owner ship, value of livestock also reduced the chance of being poor,
while the household operating 0.5 acres and more also less poor. This
emphasised on the redistribution of the land (irrigated and rain-fed
both) because land distribution pattern is much skewed in rural
Pakistan, that's why the agriculture income contributes most in the
income inequality. The analysis also pointed out the location specific
factor involved in deriving rural incomes, not only because of
agro-ecological region but also because of the difference in
infrastructure and even social net works for the migrants [see Malik
(2005); Adams and Alderman (1992); Adams and He (1995)]. Remittances
also reduced the chance to trip in to poverty (both domestic and
foreign).
Therefore one can conclude from the results reported above that:
* Despite the high growth rate in agriculture sector rural poverty
in Pakistan is increasing.
* The non farmer households had higher trends of poverty than
Farmer households.
* The lowest four deciles (income groups) are in severe poverty.
* Income and employment multipliers of agriculture growth were
insufficient to lead to substantial gains in rural form and non-farm
incomes.
* Diversifications of the sources of income other than agriculture
are needed in rural areas.
* Location is an important factor in determining real income and
poverty status; not only because of agro-ecological factors but also
because of the difference in infrastructure and even social net works
for the migrants.
* Education, livestock ownership, remittances and farming status
had strong impact on the chance of exiting from poverty.
* Large household size and high dependency ratio increased the
chance to tip into poverty.
Policy Recommendations
The analysis undertaken in this study leads to the following policy
implications:
* Agriculture growth alone with out any specific strategy is in
sufficient to reduce the level o rural poverty; therefore a
comprehensible strategy should be developed to trickle down the growth
at the grass root level.
* Non agriculture sector should be developed to diversify the
income sources of poor households, because analysis highlights the fact
that income and employment multipliers of agriculture growth were
insufficient to lead to substantial gains in rural form and non-farm
incomes.
* Education should be given to every individual, because education
plays a vital role in the exit from poverty.
* Land should be redistributed, because the pattern of land holding
in Pakistan is very much skewed; and lack of assets make it very
difficult for poor households to smooth their consumptions in bad years.
* Infrastructure must be improved, because location specific
factors are also involved in determining the poverty status.
* The results showed the need of more disaggregated analysis and
also there is need of more recent data to capture the recent trends in
poverty.
Appendix Table 1
Descriptive Statistics
Explanatory variables N Minimum Maximum
Adult males, age 16-64 (% of household
size) 1260 .00 .80
Adult females, age 16-64 (% of
household size 1260 .06 .83
Dependency Ratio (dependants/adults) 1260 .00 5.00
Headcount of members in household
size 1260 2.00 27.00
Males with at least primary or middle
school education (% of males) 255 .00 1.00
Females with at least primary or middle
school education (% of females) 255 .00 1.00
Males with secondary or college
education (% of males) 255 .00 1.00
Females with secondary or college
education(% of females) 255 .00 .50
=1 if household size head has basic
education 1260 .00 1.00
Real adult equivalent remittances 1260 .00 125462.13
Value of livestock 1260 0.0000 132200.0000
Tractor value 1260 0.0000 256000.0000
Acres of rain-fed land owned 1256 0.00 143.00
Acres of canal- or well-irrigated land
owned 1256 .00 50.00
=1 if household size operates >=0.5
acres; =0 otherwise 1260 .00 1.00
Valid N (list wise) 254
Std.
Explanatory variables Mean Deviation
Adult males, age 16-64 (% of household
size) .3060 .14271
Adult females, age 16-64 (% of
household size .2920 .12619
Dependency Ratio (dependants/adults) .9235 .82332
Headcount of members in household
size 8.3643 3.44430
Males with at least primary or middle
school education (% of males) .3501 .29725
Females with at least primary or middle
school education (% of females) .1280 .20080
Males with secondary or college
education (% of males) .1393 .23018
Females with secondary or college
education(% of females) .0203 .08484
=1 if household size head has basic
education .4762 .49963
Real adult equivalent remittances 1643.6765 6156.79914
Value of livestock 5632.642123 13640.2657379
Tractor value 6977.857165 30198.8668371
Acres of rain-fed land owned 5.2432 16.98153
Acres of canal- or well-irrigated land
owned 2.4243 6.20188
=1 if household size operates >=0.5
acres; =0 otherwise .7341 .44197
Valid N (list wise)
Appendix Table 2
Results of Logistic Regression for Determinants of Poverty Status
Exp(B) or
Variables in the Equation. B S.E. Sig. Odd Ratios
Madlt -.264 * .143 .065 .768
Fadlt -.668 * .156 .000 .513
Depend .256 * .032 .000 1.291
Hhsize .057 * .003 .000 1.059
Headeduc -.431 * .023 .000 .650
Mbasic -.244 * .074 .001 .784
Fbasic_1 -.640 * .104 .000 .527
Msec_1 -1.320 * .093 .000 .267
Fsec_1 -1.740 * .263 .000 .176
Tracva11 -.189 * .015 .000 .828
Istokva11 -.060 * .012 .000 .942
rae-remit1 -1.178 * .041 .000 .308
rainLD -.028 * .001 .000 .972
irrigLD -.036 * .003 .000 .964
Farmer -.098 * .026 .000 .907
Attock 1.236 * .027 .000 3.443
Constant -.321 * .121 .008 .725
* Shows that the coefficient is significantly
different from zero at 0.05 probability level.
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Comments
The paper analyses the trends and determinant of rural poverty
which is important to know since rural region is home to the poor and
bulk of the population is employed in rural areas. The paper needs some
revisions. First of all, the introduction and review of literature
section needs to be written separately as authors have mixed up these
two sections. It needs to be done rather carefully as it present
arguments in a misleading way. For example, at page 2 authors review
that Malik (2005) and Kemal (2003) have contradicted official clams of
decline in poverty between 2001 and 2006. It is noteworthy that these
two studies were conducted earlier than the official claims of
substantial decline in rural poverty. I suggest that they should also
include World Bank and other analysts' work on rural poverty which
contradicted official results. In addition, few references are not
reported correctly, they should also write the correct references for
the benefits of readers.
The authors have used the household level data which was made up of
14 rounds of the International Food Policy Research Institute (IFPRI)
from 1986-87 to 1990-91, together with a sub-sample of household panel
data included in the 2001-02 Pakistan Rural Household Survey (PRHS).
While reporting the sample size of panel data over time, the authors
should also report the initial sample size of panel data.
In poverty analysis, two methods are normally used to analyse
correlates of poverty status (a) poverty profile; (b) poverty status
regression. The authors have used logistic regression model to determine
the trends in rural poverty in some selected districts of Punjab which
provide an opportunity to assess the correlates of poverty in a
multivariate framework. In this context, the most important
methodological issue is the choice of poverty line. Surprisingly, the
paper selected to use national poverty line to estimate rural poverty
which is likely to overestimate the rural poverty as national poverty
line is about 10 percent higher than the rural poverty line. There is a
need to interpret the results carefully as paper concludes that rural
poverty is rising in the first five years but increased significantly in
2002. This is not the case, if you look at the table. Rather rural
poverty has a mixed trend in the first five years but increased
significantly in 2002
The logistic regressions on the poverty status of households for
the first period (1986-87 to 1990-91) are similar to the results of
McCullough and Baulch (1998) and Adams and He (1995). However, it would
be interesting to know how the characteristics of the poor based on
logistic regression model are comparable to poverty profile methodology.
In conclusion, authors make argument for land reform as land
distribution is much skewed in rural Pakistan. This may be true but it
should be supported by the evidence that can be obtained from previous
issues of PDR. In the end, the authors should discuss the theme of the
conference, economic sustainability in globalised world and try to link
the paper with theme.
Talat Anwar
Canadian International Development Agency, Islamabad.
(1) Planning Commission/CRPRID (2006), based on inflation (CPI)
adjusted official poverty line of Rs 878.64 in 2004-05.
(2) The bottom 40 percent is defined according to the 5-year
average of real income per adult equivalent from 1987 to 1991.
Farmer households have a minimum average of 0.5 acres of land in
operation (on average) over the 1987 to 1991 period
Designation as non-farmer merely denotes an average over 5 years of
less than 0.5 acres of land in operation and does not necessarily rule
out the possibility of having up to 2.5 acres of land in operation in
any given year. Also, because this designation is based on operation in
1987-1991, it may no longer be accurate in 2002.
(3) poverty is defined relative to the national poverty line of
3,648 (1991) Rs/adult equivalent/year. The discussant Dr Talat Anwar at
PIDE conference May, 2009 Islamabad suggested to use rural poverty line
instead of national poverty line, but unfortunately the rural poverty
line is not available for 1991. Therefore it is left for future study.
Amara Amjad Hashmi <amara_hashrni@hotmail.com>, Maqbool H.
Sial <maqsial@yahoo.com> are Graduate Student and Maaida Hussain
Hashmi <maaidahashmi@hotmail.com> is Professor, Department of
Economics, University of Sargodha.
Table
Headcount Measure (% below Poverty Line)
for Pakistan-1992-93 to 2004-05
Planning
World Bank Commission
FBS (2001) (2002) (2003)
Rs 682 Urban Rs 767 Rs 748
in 1998-99 Rural Rs 680 in in 2001-02
Poverty Lines Prices 1998-99 Prices Prices
Overall
1992-93 26.6 25.7 --
1993-94 29.3 28.6 --
1988-99 32.2 32.6 30.6
2001-02 -- -- 32.1
2004-05 -- -- --
Rural
1992-93 29.9 27.7 --
1993-94 34.7 33.4 --
1988-99 36.3 35.4 34.6
2001-02 -- -- 38.9
2004-05 -- -- --
Urban
1992-93 20.7 20.8 --
1993-94 16.3 17.2 --
1988-99 22.4 24.2 20.9
2001-02 -- -- 22.6
2004-05 -- -- --
Planning
Anwar and Commission/
Qureshi (2003) CRPRID (2006) (1)
Rs 735 Rs 723
in 2001-02 in 2001-02
Poverty Lines Prices Prices
Overall
1992-93 -- --
1993-94 -- --
1988-99 30.4 --
2001-02 35.6 34.5
2004-05 -- 23.9 *
Rural
1992-93
1993-94
1988-99 32.1
2001-02 41.0 39.3
2004-05 -- 22.7 *
Urban
1992-93 -- --
1993-94 -- --
1988-99 26.39 --
2001-02 26.47 22.7
2004-05 -- 14.9 *
Source: * Anwar (2006).
Incidence of Poverty (Headcount Ratio)
Years Full sample Bottom 40% Non-farmer Farmer
1986-87 35% 70% 36% 34%
1987-88 39% 73% 36% 41%
1988-89 48% 82% 54% 46%
1989-90 46% 81% 57% 42%
1990-91 38% 70% 51% 34%
2001-02 57% 67% 61% 52%