Human Capital Convergence: Evidence from the Punjab

Article excerpt

Abstract

While the literature on economic growth provides mixed evidence on convergence across different countries and regions, a large number of studies point toward the widening income gap between rich and poor. In the development literature, a broader range of national welfare indicators beyond income per capita-health and education in particular-are considered important instruments for measuring progress in human development. This article examines education and other selective welfare indicators to determine if there has been unconditional and conditional convergence across the districts of Pakistani Punjab over the period 1961-2008. The study can be considered part of the growing literature that looks at growth theory in developing countries in the context of human capital. Thus far, few studies have examined human capital in the context of convergence, and Pakistan has not been studied in any depth up to now. The results of our empirical analysis show that over the last five decades, both unconditional and conditional convergence has taken place in literacy rates across Punjab, and that this has been accompanied by increased gender parity in educational enrolment levels and improved housing conditions.

Keywords: Human capital, unconditional convergence, conditional convergence, Pakistan.

JEL Classification: I31, R10.

(ProQuest: ... denotes formulae omitted.)

1. Introduction

The variations in countries'/regions' economic performance has fueled the debate on convergence in their growth rates to determine if initially disparate countries/regions are converging to common steady-state levels. The literature on economic growth provides mixed evidence on this, and many studies point toward the widening income gap between rich and poor. In the development literature, a broader range of national welfare indicators beyond income per capita-health and education in particular-are considered key instruments for measuring progress in human capital development. With the rising divergence of income levels across the world, it is pertinent to ask whether such divergence is also occurring in the different aspects of human development.

This study examines three human development indicators-housing, education, and health-to determine if there has been convergence across the districts comprising Pakistani Punjab over the period 1961-2008. It also focuses on convergence in education outcomes across gender to determine if the gaps between male and female enrolment levels have changed over the last six decades. The study is effectively part of the growing agenda to investigate concepts of growth theory in developing countries in the context of human capital. Given that income per capita alone is not sufficient to determine people's welfare status, by looking at convergence in social welfare indicators we attempt to study development in a new light. Few studies have examined human capital in the context of convergence and Pakistan has not been studied in depth in any such work; this study is, therefore, among the first to do so.

There is growing concern that regional inequality in Pakistan has worsened over the past few decades (Abbas & Foreman-Peck, 2008; Khan, 2001). Inequitable growth has also been a cause of concern for other developing countries such as China and India. As Pakistan's largest and most diverse province, Punjab has been criticized for holding the majority of the country's wealth compared to other provinces and, within Punjab, the unbalanced division of resources has fueled the call for Punjab to be divided into new, smaller provinces.

A number of studies on Pakistan find that the intensity of poverty increases as one moves toward the southern and western regions. Literacy rates and enrolment levels, along with access to basic public goods such as electricity, gas, and sanitation, are far lower in the southern and western districts than elsewhere (Cheema, Khalid, & Patnam, 2008; Khan, 2009). …