The Effect of Education on Poverty in Pakistan

Education is an important component of human capital since it helps in improving the production process. Education equips individuals with the necessary skills to raise their standards of living. A shift towards capitalism has shown the need for human capital to utilize technological skills, natural capital and physical capital. Pakistan is categorized as a developing country with a GDP of 278.2 billion dollars, a GDP growth rate of 1.0% annual change and GNI per capita of 4800 PPP dollars. Human capital is critical for the country, especially in its objective of development and poverty elimination. There is a direct linear relationship between earnings and education, which is an essential element in poverty reduction. Memon et al., 2019 indicates that there is a 7.3% increase in individual monthly earnings with an additional year of schooling. Therefore a person who went to school for ten years earns relatively 37% more than a person who did not attend school. Awan et al., 2011 conducted an analysis that provided more insights on the impact of education. In their research paper, they indicated that "each additional year of schooling level increased earnings by 3 percent at primary level, by 5 percent at the secondary level, and by 7.1 to 8.2 percent at higher/tertiary level." There is also a positive impact attributed to a technical training where individual monthly income increases by 2.5%. This data indicates that Pakistan can take advantage of education and invest in the poor to minimize the gap as the poor earn more and become more productive.

The article by Awan on the impact of education on poverty provides a vital aspect of focusing the investment on the head of a family. According to the article, there is a positive outcome not only on earning and productivity of the head of the family but also for all family members. Memon, Ali & Khalil, S. (2020) focuses on valuables per capital expenditure and identified education as a critical value. Through this, they analyze the impact of education in rural and urban areas. They concluded that education is relevant from the overall welfare point of view. They also recommend implementing policies that focus on education as a significant element in reducing the probability of household poverty status. Primary school is classified as the threshold of human capital. However, there is a need for investing in secondary schools and high education to help in optimizing economic growth and development. The investment in high education has shown to have sustenance and better acceleration on development.

Analysis on Indian welfare suggests that higher education has an inverse relation to poverty, while the high school has a negative relation and education (illiteracy, literacy, and primary education) are positively related to poverty ratio.  This shows that secondary and higher education with an inverse relation to poverty can be implemented to address the issue of poverty. According to the World Bank (2020), the literacy levels in Pakistan stand at 59%. As of 2017, 26% of Pakistan's population lived below the poverty line, with 33% rural and 12% urban populations (Nawaz & Iqbal, 2016). Therefore, there is a need to implement policies that have a general impact on rural and urban areas since the prevalence rate for both areas is below average. With this approach, Pakistan can reduce the poverty gap while ensuring an increase in productivity. Lastly, Afzal et al. 2010 uses time-series data from 1971-2009 and found that there are more positive impacts on economic growth when a country invests in education than short-term impact.