Impact of Electricity Subsidies on Poverty in Pakistan
Author: Tayyaba Arif

In recent years electricity subsidies provided to protect and safe guard poor group is the most important question in emerging countries. Basically Government subsidies have certain motives such as redistribution of wealth, to increase producer surplus by reducing cost of production, to make the necessities attainable for poor, and to increase economic growth, to moderate poverty and income inequality. This study analyze both short run and long run association between electricity subsidies given to residential, agriculture and industrial sector and poverty along with other variables that are unemployment rate, economic growth and income inequality, because these variables are directly and indirectly get affected by electricity subsidies. This study uses annual data from 1990-2018 and ARDL estimation technique is used because the variables are not integrated at the same level and sample size of this study is small. ARDL estimation technique is efficient for this kind of data set. Our results show that electricity subsidies given to industrial and agriculture sector assist in reducing poverty. However, electricity subsidies to residential sector are statistically insignificant in reducing poverty. Unemployment rate and income inequality is positively related with poverty, this means that when income inequality and unemployment increases it cause poverty to increase. On the other hand economic growth is negatively related with poverty level in Pakistan. In accordance with the results, it is recommended that to help poor households, cash transfers and targeted subsidies should be given. Supervisor:-Dr. Attiya Yasmin Javid

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Supervisor: Attiya Yasmin Javid

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