Tariff Reduction and Income Distribution: A CGE-based Analysis for Urban and Rural Households in Pakistan
AbstractThe study, based on SAM-based CGE model, examines the impact of reduction in tariff on industrial imports on urban and rural households and on other broad macroeconomic aggregates. Based on simulation exercises for 40 percent, 60 percent and 80 percent reduction in tariff on industrial imports, the results suggest that tariff reduction lowers price of imported goods, affects domestic relative price structure, and supply and demand of goods. The results show that the impact of these changes in relative prices is disproportionately higher for the low-income groups. The returns to labour and capital have declined in nominal terms. The share of capital in total GDP increases from 0.72 to 0.73 while the share of labour declines from 0.28 to 0.27. This has negative welfare implications as poor households receive higher percentage of their income from wages and salaries. Results also reveal that tariff reduction increases the gap between the rich and the poor. The Gini coefficient indicates worsening of income distribution, however, the difference between the pre- and post-reform Gini coefficient is very small.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Pakistan Institute of Development Economics in its series MIMAP Technical Paper Series with number 2001:11.
Length: 36 pages
Date of creation: 2001
Date of revision:
Other versions of this item:
- A.R. Kemal & Rehana Siddiqui & Rizwana Siddiqui, 2001. "Triff Reduction and Income Destribution A CGE-based Analysis for Urban and Rural Households in Pakistan," PIDE-Working Papers 2001:181, Pakistan Institute of Development Economics.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rizwana Siddiqui & Zafar Iqbal, 2001. "Tariff Reduction and Functional Income Distribution in Pakistan: A CGE Model," MIMAP Technical Paper Series 2001:10, Pakistan Institute of Development Economics.
- Rashid Amjad & A.R. Kemal, 1997. "Macroeconomic Policies and their Impact on Poverty Alleviation in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(1), pages 39-68.
- Rizwana Siddiqui & Zafar Iqbal, 1999. "Social Accounting Matrix of Pakistan for 1989-90," PIDE-Working Papers 1999:171, Pakistan Institute of Development Economics.
- White, H., 1997. "The economic and social impact of adjustment in Africa : further empirical analysis," ISS Working Papers - General Series 18987, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
- Zafar Iqbal & Rizwana Siddiqui, 1998. "The Impact of Structural Adjustment on Income Distribution in Pakistan A SAM-based Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 377-397.
- Lambert, Sylvie & Schneider, Hartmut & Suwa, Akiko, 1991. "Adjustment and equity in Cote d'Ivoire: 1980-86," World Development, Elsevier, vol. 19(11), pages 1563-1576, November.
- Iqbal, Z., 1996. "Three-Gap Analysis of Structural Adjustment in Pakistan," Open Access publications from Tilburg University urn:nbn:nl:ui:12-73593, Tilburg University.
- A.R. Kemal, 1994. "Structural Adjustment, Employment, Income Distribution and Poverty," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 33(4), pages 901-914.
- de Melo, Jaime, 1988. "CGE models for the analysis of trade policy in developing countries," Policy Research Working Paper Series 3, The World Bank.
- Rizwana Siddiqui & Abdul Razzaq Kemal & Rehana Siddiqui & Ali Kemal, 2008. "Tariff Reduction, Fiscal Adjustment and Poverty in Pakistan: a CGE-Based Analysis," Working Papers MPIA 2008-17, PEP-MPIA.
- Butt, Muhammad Shoaib & Bandara, Jayatilleke S., 2008. "National and Regional Impacts of Increasing Non-Agricultural Market Access by Developing Countries – the Case of Pakistan," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 38(2), pages 277-311, September.
- Usman Mustafa & Waqar Malik & Mohammad Sharif, 2001. "Globalisation and Its Implications for Agriculture, Food Security, and Poverty in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(4), pages 767-786.
- Akhter, Naseem & Ali, Amanat, 2007. "Does Trade Liberalization Increase the Labor Demand Elasticities? Evidence from Pakistan," MPRA Paper 3881, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.