Abstract:
Engel’s law, an empirical regularity observed for around 200 years, states that the share
of food in household expenditure declines with households’ total expenditure. The
empirical regularity expressed in Engel’s law is clearly present in existing Pakistani
household income and expenditure data. Using economic theory an ‘Engel Curve’,
reflecting Engel’s Law, can be extended to allow for additional effects of a social nature,
including the influence of education on welfare and considering education as the ability
to purchase things. Yet to our knowledge this has not been exploited in empirical
research to infer the differential impact of education on measures of household wellbeing
across income groups and provinces. The study will address this welfare analysis
gap. Our Engel curve specifications close the gap between economic theory and
empirical applications critical to evaluating the effects of education on economic wellbeing.
The results show that net primary and matriculation education enrolment ratios
may bring a significant improvement in the welfare of people. There is a need to
specifically redirect resources to Balochistan where access to educational opportunities
is rather low. The access to educational opportunities should be increased in Sindh and
KPK as well. Such steps are required to bring inter provincial harmony in Pakistan. The
people fall in the lowest two income groups worse off in terms of access to educational
opportunities from 2008 to 2011. So efforts should be stepped up to enhance the access
to educational opportunities at primary and matriculation levels across these lowest
income groups. These informed predictions can guide policy advisors on where to
concentrate efforts and reduce economic distortions. Our Engel curve oriented research
approach is in line with the theme of conference “Human Capital Development for
Sustained Economic Growth”, as focused efforts can energize the citizens of Pakistan
and re-track the economy on a sustainable path in the long run.
