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Microsimulating FGT Indicators Based on Pakistan HIES 2010-11 by Dr. Dario Debowicz

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Part of PSSP's efforts in capacity building of distributional indicators and micro-simulations linked to CGE modeling

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Microsimulating FGT Indicators Based on Pakistan HIES 2010-11 by Dr. Dario Debowicz

  1. 1. Using HIES ConsumptionHIES data is used to inform the microsimulations1) Consumption data from HIES is mapped onto the consumptionvariables we want2) Observed households are mapped into the representativehousehold groups in the CGE model2) Data is standardized to monthly consumption3) Data is weighted and aggregate consumption variables are created
  2. 2. SAM HIES Consumption ItemsWheat = Wheat and Wheat flour + Bread, Bun, Sheermal + Tandoori Roti, Nan, Kulcha, Puri, ParathaFruit and Vegetables = Banana + Citrus fruits + Apple + Dates + Grapes + Mango + Other Fresh Fruits + Canned Fruits + Potato + Onion +Tomato + Cabbage, Cauliflower + Karaila, Lady finger, Brinjal, Cucumber + Tinda, Pumpkin, Bottle Gourd + Radish, Turnip, Carrot + Peas,Moongra + Other ( Green Chillies, Tural, Lettuce, Kulfa etc. ) + Canned vegetablesLivestock = Milk (fresh & boiled) + Milk (packed by milk plants) + Milk, Powdered (for adults & children ) + Beef + MuttonPoultry = Chicken meat / Other poultry birds + EggsFishing = Fish / Prawns, Shrimps, CrabsVegetable oil = Desi Ghee + Vegetable Ghee + Cooking oils, other oils and fatsSugar = Sugar (desi or milled)Cotton Cloth = Purchase of cloth(for pillow covers, bed sheets quilts etc.) & Purchase of cotton (for quilts, pillows, etc.)Knitware = New ready-made & second hand garments/under garments (for males, females & children), Sweaters,Garments = Woolen cloth (suits, trousers, coats, etc.), Cotton cloth ( shirts, shalwar, etc.), Mixed(nylon ) + Wool for sweaters, socks, shawls,gloves etc. + Burka, Chadar, Ajrak + Tailoring, embroidery, alterations etc. charges ,Clothing supplies(threads, needles, pins, buttonsTextile = Readymade pillow covers, bed sheets, blankets, curtains, mosquito nets etc. + Carding and other stitching charges on householdtextileLeather = Footwear made of leather, synthetic or any other material (all types new or second hand) + Repair charges of footwear, Polishes,shoe shining and cleaning brushes etc. + Brief cases, hand bags, watch straps, belts etc. (leather or plastic)Petroleum = Petrol/ Diesel charges, lubricants & oils, puncturesRail = Expenses on travelling by train
  3. 3. Road Transport = Expenses on travelling by road (bus, taxi, rickshaw etc.) + Other travelling charges like tongas, camels, donkeys, ferries,bicycles, Garage + Other expenses on tyre, tube, spare parts, repairs of vehicle etc. and service charges + Transport and travelling vehicles(Bicycle, Motorcycle, Scooter, Car, horses, camels, tongas etc.)Construction = Minor repairs/maintenance & redecoration/addition/alterationOther Manufacturing = Personal durable effects (Wrist / pocket watches, sun glasses, etc. ) + Metal furniture/ cots etc + Plasticfurniture/cots etc + Floor coverings ( hand / machine made ), carpets, rugs etc. + Electric/ oil fans (table, pedestal, ceiling, exhaust), Airconditioners, Air coolers, Refrigerators, Freezers etc. + Sewing machine, knitting machine (electric / hand) + Other(trunks, suitcase etc.),Wall / table clock, water pipes (rubber, nylon, plastic), thermos bottle etc.Air Transport = Expenditure on by Air TravelRent Housing = House rent (Market value) + Subsidized house rent (Hiring, Self-hiring) (Market value) + Summer cottage rentOwn Housing = Rent free accommodation (Market value) + Owner occupied accommodation(Market value)Education = School/college fees and private tuition fees + Books and exercise note books / copies, stationary etc. + Hostel expenses +Stationery supplies such as pen, pencils, stapling machine, pin etc.Health = Medical fees paid to doctors, specialists, hakeem / midwives outside hospital, including medicine etc.Hospitalization charges, including fee etc. for doctor / hakeem etc.and laboratory tests, x-Ray chargesDental care, teeth cleaning, extraction, charges, eye glasses and all others, not elsewhere.classifiedChemicals = Purchase of medicines & vitamins, medical apparatus, and other equipment / supplies etc.Rice = Rice and rice flourOther Crops = Maize, Barley, Jawar and Millet (Whole and Flour ) + Suji, Maida, Besan + Gram Whole ( Black and White) + Dal chana + Mash +Moong + Masoor + Other ( Arhar, chick / pigeon /garden peas, sunflower, soybean )
  4. 4. Other Food = Other cereals products (Vermicellies, Corn flakes, Noodles, Macronis, Spageite) + Biscuits ( Sweet & Saltish ) + Other baked orfried products (Pakoras, Samosa, Qatlama, popcorn etc.) Cake + Jams, Marmalades/ Tomato Ketchup/pulp/ Pudding, Jelly, Pickles, Chatni,Vinegar + Food and Grain milling/grinding charges + Sugarcane juices, Other fresh juices, Fruit juices (packed), Mineral water etcTaxes = Fines, birth/marriage taxes and pet keeping taxes etc. Passport/Visa, Other cesses & taxes + House and property taxWood = Fire woodEnergy = Kerosene oil + Char coal + Coal hard & soft peat + Dung cake (dry) + Gas (pipe), (Gas (cylinder) + Electricity + Beggasses, Agriculturalwastes for fuel purposesPersonal Services = Hair cutting & dressing etc. for men(include shaving material), women and children + Beauty parlour services + Drycleaning, washing, dying, darningOther Private Services = Wages & salaries paid to servants, gardeners, sweepers, chowkidars, aya + Legal expenses (not related to business)+ Insurance premium such as fire, accident and travel insurance (exclude life / housing/vehicle insurance)
  5. 5. • The data is generated for every household of theHIES survey. Every household is a single row in thedataset, and variables are across the columns:hhcode RHG SIZE ADEQ WEIGHT C-WHTF C-CHEM … TOTAL-CONS TOTAL-INCOME10011100101 H-UOQ 9 7.627234 82.58048 1900 166.6667 401022 81600010011100102 H-UOQ 7 5.529362 82.58048 1840 166.6667 267352 88800010011100103 H-UOQ 6 5.935319 82.58048 750 125 236528 30000010011100104 H-UOQ 8 7.234043 82.58048 900 166.6667 228505 67200010011100105 H-UQ2 6 5.16766 82.58048 50 66.66666 179624 38400010011100106 H-UQ1 5 4.762553 82.58048 915 166.6667 157606 240000
  6. 6. Generating the Poverty Line• Official poverty line was estimated for year 2000-01• Poverty line was ‘updated’ till year 2005-06 byadjusting the poverty line by the inflation rate• Poverty figures have not been published for 2007-08and later years due to technical issues in estimation• One of the criticisms of the updated poverty lines isthat they are based on inflation rates thatunderestimates the real inflation in Pakistan
  7. 7. • Our estimated poverty line for 2010-11 is basedon the official poverty line estimated for 2000-01(Rs748.565 per adult equivalent)• We find the government inflation rates from PBSfor different consumption groups: 1) Food,beverages & tobacco, 2) Apparel, Textile &Footwear, 3) House Rent, 4) Energy, 5) HouseholdFurniture, Equipment etc, 6) Transport &Communication, 7) Recreation, Entertainment,8) Education, 9) Cleaning, Laundry & PersonalAppearance, 10) Medicare
  8. 8. • We calculate the composition of expenditure forthese 10 consumption groups for the quintilewith lowest adult equivalent expenditure• We multiply the inflation of the consumptiongroup with its share in expenditure, and addthem for all consumption groups to calculate theinflation affecting the poor• This suggests that the inflation between 2000-01and 2010-11 is 165.69%. The official governmentinflation rate 144.26%• We use our inflation measure to update the2000-01 poverty line to year 2010-11. Thepoverty line for 2010-11 is Rs. 1988.86
  9. 9. Microsimulation of consumption valuesUpdate using the simulated percent changes in consumed quantities(from CGE model) at original prices of associated RHG:CSIMV(C,HO,SIMCUR) =*Original consumption value of the sampled householdCSIMV(C,HO,BASE)**Simulated consumption valueQHX(C,H,SIMCUR)/*Base consumption valueQHX(C,H,BASE)• H: representative household group to which observed household HO belongs.
  10. 10. Foster-Greer-Thorbecke poverty measuresαα ∑= −=MiizyzNP1)(1P0 = Poverty Headcount Ratio (HCR)P1 = Poverty Gap RatioP2 = Squared Poverty Gap Ratiowhere z is the poverty lineyi is the income (or consumption) of person iN is the number of individuals in the population,M (k in the Lecture Note) is the number of poor people
  11. 11. Microsimulation of FGT povertymeasuresPOVTAB(G,SIMCUR,FGT) =100/NI(G)* SUM(HO$HPOOR(HO,SIMCUR),GOI(HO,G)*H0V0(HO,SIZE)*H0V0(HO,WEIGHT)*(( PLADEQ - WELFHO(HO,SIMCUR))/PLADEQ)**(FGTP(FGT))), where G is group of interest (national, urban, rural), FGT and FGTP isα, NI nr of individuals, HPOOR poverty dummy, GOI identified sampledhouseholds belong to group G, size is household size, weight is nr ofhouseholds represented by observed one, PLADEQ is poverty line peradult equivalent, WELFHO is consumption per adult equivalent.

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