Tariff Reduction and Income Distribution: A CGE-based Analysis for Urban and Rural Households in Pakistan
The 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.
(This abstract was borrowed from another version of this item.)
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: P.O.Box 1091, Islamabad-44000|
Web page: http://www.pide.org.pk
More information through EDIRC
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.:
- 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.
- Iqbal, Z., 1996. "Three-gap analysis of structural adjustment in Pakistan," Other publications TiSEM aeeac5ac-5ac4-4069-a07e-2, Tilburg University, School of Economics and Management.
- De Melo, Jaime, 1988. "CGE models for the analysis of trade policy in developing countries," Policy Research Working Paper Series 3, The World Bank.
- 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.
- 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.
- 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.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:pid:mimaps:2001:11. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal)
If references are entirely missing, you can add them using this form.