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A Resource-Based Approach to the Modeling and Simulation of Income Distribution: The Case of Pakistan

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Listed:
  • Muhammad Azeem Qureshi

    (Oslo University College, Bahauddin Zakariya University)

  • Matteo Pedercini

    (Capacity Development and Modeling Millennium Institute)

Abstract

Developing countries are affected by evident and persistent asymmetric income distribution. The increasing relevance of this issue to development agendas sets the need for planning tools that can support the analysis of the long-term impacts of alternative policies on income distribution. For this purpose we use a resource-based approach and develop a System Dynamics based simulation model, which we apply to the case of Pakistan. The model focuses on the processes of the accumulation of physical and human capital, which we consider as the endogenous sources of household income. Policy analysis suggests that public investment in education and micro-credit, financed by a modest increase in income tax for the high-income groups, positively affects equitable income distribution and economic growth. We believe that the analytical framework developed integrates and complements existing approaches to modeling income distribution by providing a broader and longer term perspective.

Suggested Citation

  • Muhammad Azeem Qureshi & Matteo Pedercini, 2010. "A Resource-Based Approach to the Modeling and Simulation of Income Distribution: The Case of Pakistan," Journal of Income Distribution, Journal of Income Distribution, vol. 19(3-4), pages 65-87, September.
  • Handle: RePEc:jid:journl:y:2010:v:19:i:3-4:p:65-87
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    References listed on IDEAS

    as
    1. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    2. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
    3. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    4. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, pages 869-887.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    income distribution; dynamic analysis; planning model; government policy; System Dynamics; resource-based approach; Pakistan;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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