Pakistan’s economic growth in the past decade is largely due to growth in income. Labor force is moving away from agriculture and into industry and service. This occupational shift allowed for more paid workers as opposed to unpaid family labor. During this period, income inequality increased slightly. Changes in composition of employment and regional distribution of the population contributed to the most income inequality.
Poverty and inequality are rooted in availability of opportunities when a person is growing up. Better circumstance allows for access to education, healthcare, infrastructure, etc. According to World Bank’s Human Opportunity Index Paper on Pakistan, the areas that present the greatest challenges are access to gas, improved sanitation, and finishing primary and secondary school.
Pakistan's GDP growth in the past years attributed to strong agricultural sector. The lack of human development hinders the country’s ability to reduce poverty. More than 50% of households in Pakistan are headed by persons who have had no formal education. The incidence of poverty is highly correlated with the literacy and educational attainment of household heads: households headed by illiterate persons tend to be among the poorest. There appear to be more transitory poor than chronically poor, and the depth and severity of poverty is higher among transient poor households. These results indicate that transitory poverty can be reduced if policy interventions aim at leveling out income fluctuations. Reductions in chronic poverty are possible through large and sustained growth in household incomes.
Poverty transition is an important determinant of school enrollment. While it is difficult to distinguish cause and effect in the relationships between low educational attainment and economic status, evidence suggests that the poor are trapped in a cycle of low income and low human capital that perpetuates their deprivation. Majority of street children work 8-12 hours a day with average income of Rs. 40-60/day to support their families. If we could identify households with potential school drop-outs, maybe we could proactively prevent children from living on streets.