by Geoffrey A. Jehle (Nov. 1993)

This paper presents empirical evidence on the extent to which zakat—a form of religiously mandated charity under Islam—achieves its intended objective in Pakistan. Detailed income and expenditure data from Pakistan’s Household Income and Expenditure Survey for 1987–88 are used to construct two income distributions—one containing the distribution of income which would have been obtained if relevant forms of charity were not given, and one containing the distribution of income which obtains under a regime in which such charitable giving takes place. Atkinson-Kolm-Sen (AKS) ethical relative indices of income inequality are computed for Pakistan and each of its four provinces, for each of these two income distributions, and are compared over a range of parameter values. Evidence is found that zakat does redistribute from the better off to the worse-off, and so achieves some reduction in measured income inequality in Pakistan. Both intra-province and inter-province components of overall inequality decline, though the amount of change is generally small. These conclusions are shown to be robust to a wide range of normative values the investigator may bring elect.

Published: Review of Income and Wealth, June 1994, 40(2): 205-16.