Poverty and vulnerability in the Punjab, Pakistan: A multilevel analysis

- Vulnerability to poverty is not just a rural phenomenon in Pakistan.
- Vulnerability is mainly driven by low consumption prospects rather than high consumption volatility.
- Vulnerability to idiosyncratic shocks is higher than vulnerability to covariate shocks.

This study estimates the prevalence and extent of vulnerability to poverty in the Punjab province of Pakistan. A multilevel model is used to analyze survey data of about 90,000 households distributed across 150 towns/tehsils. Empirical estimates show that the vulnerability rate is higher than the rate of poverty, and poverty-induced vulnerability is higher than risk-induced vulnerability. Moreover, idiosyncratic-vulnerability is higher than covariate-vulnerability. Unlike previous studies that find poverty to be a rural phenomenon, this research shows that poverty and vulnerability are equally high in urban areas. A high level of urban vulnerability adds urgency to anti-poverty interventions given a rapid urbanization in Pakistan.