A Comparison of the Interregional Purchasing Power of Industrial Wages in Pakistan (Notes & Comments)

In: The Pakistan development review: PDR, Band 7, Heft 4, S. 533-543

Abstract

Data on regional income and its various components are
frequently used in Pakistan in economic planning and to formulate and
evaluate other economic policies. Characteristically, these regional
income magnitudes are estimated on the basis of the prices prevailing in
different regions. Generally speaking, any comparative analysis of the
regional real incomes on the basis of such estimations is inadequate and
in certain cases misleading if the intra-regional price structure is
substantially different in various regions. Although work has been done
in measuring different components of regional income in Pakistan, no
significant effort has so far been made to measure the purchasing power
of income or its components in various regions. The focus of attention
in this study is the comparison of the purchasing power of industrial
wages in various regions in Pakistan. These index numbers may be used to
formulate a national wage policy or as a guide to better allocate
investment in different regions in the light of national economic
objectives. Strictly speaking, these index numbers of purchas¬ing power
are not applicable to components of regional income other than
in¬dustrial wages but in a broad sense they probably indicate the
direction of diver¬gence.