Pakistan Institute of Development Economics



A Comparison of the Interregional Purchasing Power of Industrial Wages in Pakistan (Notes & Comments)

Author: Abdul Ghafur

Data on regional income and its various components are frequently used in Pakistan in economic planning and to formulate and evaluate other economic policies. Characteristically, these regional income magnitudes are estimated on the basis of the prices prevailing in different regions. Generally speaking, any comparative analysis of the regional real incomes on the basis of such estimations is inadequate and in certain cases misleading if the intra-regional price structure is substantially different in various regions. Although work has been done in measuring different components of regional income in Pakistan, no significant effort has so far been made to measure the purchasing power of income or its components in various regions. The focus of attention in this study is the comparison of the purchasing power of industrial wages in various regions in Pakistan. These index numbers may be used to formulate a national wage policy or as a guide to better allocate investment in different regions in the light of national economic objectives. Strictly speaking, these index numbers of purchas¬ing power are not applicable to components of regional income other than in¬dustrial wages but in a broad sense they probably indicate the direction of diver¬gence.

Abdul Ghafur

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