Pakistan Institute of Development Economics

Technical Paper Series 02
Distributional Impact Of Structural Adjustment On Income Inequality In Pakistan: A Sam Based Analysis
Publication Year : 1999

Domestic Poverty And Income Inequality Are Closely Related To The State Of The Economy, Which Is Linked With Internal And External Economic Policies. Since 1988, Under The Rubric Of Structural Adjustment Program (Sap), Pakistan Has Made Use Of Fiscal, Monetary And Trade Policies To Correct Her Macro Economic Imbalances. It Is Hard To Substantiate With Proof That These Programs Protect The Poor. A Number Of Studies Have Found That Income Inequality Has Been Getting Worse During The Adjustment Period In Pakistan.1 For Example, Kemal (1994), Khattak And Jaffery (1995) And Anwar (1996) Found That Sap Accompanied With Rising Income Inequality And Poverty In Pakistan. But These Studies Are Restricted As They Did Not Employ An Adequate Methodology To Assess The Impact Of Structural Adjustment Reforms On Income Inequality.2 This Paper, However, Uses A Simple Static Fixed-Price Sam-Based Framework To Analyze Distributional Outcome Of Incomes For Rural And Urban Households. This Methodology Is Useful Because Social Accounting Matrix (Sam) Represents The Whole Economy And It Does Not Need A Large Data Set.