AGRICULTURE VALUE ADDED AND INCOME INEQUALIYT IN PAKISTAN: A TIME SERIES ANALYSIS
Abstract
Income inequality is very important for the growth and poverty alleviation in an economy. This analysis examines the impacts of agriculture value added, service sector value added, exports of goods and services and foreign direct investment as percentage of GDP on income inequality measured by Gini coefficient in Pakistan. In this examination, ADF unit root test is applied to find each time series variable stationary at its first difference. Johansen’s cointegration approach is applied to analyze the long run determinants of income inequality. All the explanatory variables are found to negatively and significantly affect income inequality in long run except service sector value added. The service sector value added showed a positive impact on income inequality but this result is insignificant. Error Correction Model is also applied for the analysis of short run dynamics of income inequality. The study also provides some policy implications for the improvement of infrastructure, macroeconomic environment, abolition of corruption, to get rid of terrorism, construction of new dams and develop a robust education and technical training system for the development of human capital in the country.References
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