It is argued that masses in Pakistan are excluded from the mainstream progress of education resulting in social unrest and adverse state of human development. This paper examines prevailing inequality in and exclusion from education in the Khyber Pakhtunkhwa province of Pakistan, and provides an empirical base for designing an appropriate policy framework to mitigate the underline issues. Towards this end the household-based education and Inequality-adjusted education indices are derived using Foster-López-Calva-Székely (FLS) methodology at the provincial, and district levels from the most recent Pakistan Social and Living Standard Measurement (PSLM) survey 2014-15. The provincial analysis is elaborated at the urban and rural regions as well. The distribution of these indices across households are utilized to measure inequality and inclusiveness coefficients by employing “Atkinson’s inequality measure” and “sixty percent of median as threshold of exclusion,” respectively. At the district level the impact of economic, social, demographic, and locational factors on inclusiveness of education are also investigated using linear regression. The results demonstrate that KPK households reside on average in low category of actual education level experiencing high inter-regional and intra-regional disparities and exclusions. At the district levels, the inequalities in educational achievement and exclusions are even more pronounced, indicating that aggregated analyses suppress the intra-regional disparities and segregations. Based on these findings, it is asserted that investment in social infrastructure specifically educational, health, and law and order facilities, development of agriculture sector, and eradication of gender discrimination, are important factors to promote inclusive education in the province.

The present study empirically investigates the relevance of the various specifications of relative Income hypothesis (RIH) in the case of Pakistan. World Development Indicators’ data is analyzed over the period of 1986 to 2016. This study tests the existence of income, consumption, and habit ratchet effects at the National level. Based on stationarity tests the techniques of Box Jenkin, Two Stage Least Square, Generalized Methods of Moments, and Limited Information Maximum Likelihood Method are utilized to estimate the four versions of relative income hypothesis. Findings of this research validate the significant prevalence of three types of ratchet effects in case of Pakistan. In Duesenberry-Eckstein-Formm (DEF) model, habit ratchet effect is found to be stronger than income ratchet effect. Whereas in modified Davis model Consumption ratchet effect exceeds the habit ratchet effect. It is observed that long run marginal propensities to consume are closer to one which demonstrates smooth consumption behavior over long period in Pakistan. The estimated short run marginal propensities to consume are observed to be less than long run marginal propensities to consume that accords with the existing consumption theory. These findings imply that all ratchet effects put pressure upon consumers to maintain the highest standard of living enjoyed in the past. In this process households do not retain balance between savings and consumption. Based on these findings, it is suggested to consider the impact of societal factor in formulating policies to shape the consumption patterns.

In this paper panel analysis is being carried on original Relative Income Hypothesis (RIH) and its other modifications over the time span of 1998 to 2015. To furnish reliable and appropriate estimation, Households Integrated Economic Surveys (HIES) based consumption and income variables have been gone through various stages of data filtering. The findings of Feasible Generalized Least Squares (FGLS) significantly validate the relevance of three types of ratchet effects (income, consumption and habit) in provinces. Average Propensity to Consume is highest for Baluchi’s households followed respectively by Pashtuns, Punjabi, and Sindhi. The selection of constant slop model implies that province-wise there is no difference in magnitudes of ratchet effect obtained from various versions of RIH. All provinces make adjustments in long run to their consumption in response to income fluctuations. Estimated marginal consumption propensities are according to economic theory that shows smooth consumption path in short run as well in the long run. Polices should be formulated to switch consumer mind set from consumption oriented to saving oriented with the help of appropriate tool of fiscal and monetary policies.