Income Inequality in Pakistan: A Critical Appraisal of Causal Factors and Socio-Economic Implications

Abstract

This article presents a comprehensive analysis of the causes and socio-economic implications of income inequality in Pakistan. Using OLS methodology, the study investigates the dynamics of inequality from 1980 to 2021 and finds that increased openness has varying effects on inequality, tending to increase it. The study also provides statistical details of the normal distribution of inequality, GDP, and openness. The OLS regression results reveal that GDP has an insignificant positive impact on inequality, while openness has a considerable detrimental effect, increasing poverty by 1%. The study also tests the constant elasticity of GDP and openness and provides insights for policymakers to address inequality issues. The findings contribute to the ongoing discourse on the critical issue of income inequality in Pakistan and provide a basis for evidence-based policymaking.