Personal Earnings Inequality in Pakistan: Findings from the HIES 1993-94

The earnings of workers play important role in the well-beings of households’ as they account for the largest proportion of total household income. If earnings of workers are distributed unevenly, they contribute significantly to the inequality in the household earnings. It may not be a cause of serious concern if income inequality grows and income of the workers also grows throughout the population and the position of the bottom segment improves. It is however serious when gap between rich and poor increases by worsening the position of poor. To reduce the household income inequality it is therefore important to focus on the distribution of personal earnings and frame a policy. There are many cause of inequality in personal earnings. As workers income rises at varying rates, it may reflect the decision of household of their investment in human capital and decisions to acquire skills. The factors like education, occupation, gender, regional location, sector of employment, and non-market forces such as discrimination may also play a significant role in the distribution of earnings.