# **3. Data**

## 3.1. The PSLM survey and the estimation sample

Our analysis is based on the data from the Pakistan Social And Living Standards Measurement (PSLM) Survey. It consists of eight irregularly spaced rounds (2001, 2005, 2007, 2010, 2011, 2013, 2015, and 2018) and contains individual-level data on various aspects including education, health, employment, as well as household-level data on assets, income, and expenditure. It has national coverage and despite changes to the survey structure over survey rounds, we obtain a consistent cross-section for the purpose of our analysis in each reported year.

Our population of interest includes all Pakistani households not in the formal sector. The relevant dimension of formality for our purposes is whether a household is participating in a formal pension program, but we do not have a direct measure of this in the survey. With informality around 88% of the labor force and public employment around 8% in the period covered by the survey, this leaves at most 4% of employment covered by private pension schemes, and possibly much less. In the absence of a direct measure of pension coverage, we keep all households where neither the head nor the spouse is working for the public sector in our sample.

Table 1 shows some characteristics of the households in the data: household heads are 46 years old on average; 28% of heads have primary education and 18% have secondary education; 66% of households are rural; and they earn and consume around PK20,000 (2011 PKR) on average.

_Table 1 Summary statistics for the main variables_

|||||||Mean by su|rvey round|||||
|---|---|---|---|---|---|---|---|---|---|---|---|
||N|Mean|sd|2001|2005|2007|2010|2011|2013|2015|2018|
|Age of the household head|141034|46.0|13.8|45.8|46.0|45.9|46.5|46.2|45.8|46.1|46.1|
|% household rural|141034|65.9%|-|71.8%|65.9%|66.5%|66.5%|66.1%|64.4%|64.1%|62.7%|
|% hh head with primary education|140918|27.9%|-|27.4%|27.0%|27.9%|28.0%|28.3%|28.1%|26.9%|29.5%|
|% hh head with secondary education|140918|18.4%|-|11.1%|17.5%|20.5%|20.6%|20.9%|20.4%|14.6%|20.9%|
|% hh head with tertiary education|140918|.|-|3.1%|6.9%|6.8%|6.7%|7.1%|6.9%|.|7.7%|
|Household consumption expenditure|139797|20136|15367|15636|19035|18989|19549|20219|21344|23224|22355|
|Household income|141034|21956|34734|14941|21806|22230|20684|22200|23205|24926|24954|
|Household wealth (multiples of monthly<br>household consumption)||||||||||||
|Household net worth (excl. durables)|139797|72.6|118.5|60.2|72.3|82.0|68.2|74.4|72.6|74.2|75.7|
|Housing|139797|31.6|38.4|20.6|29.3|34.7|29.3|31.6|30.9|36.2|38.5|
|Land|139797|34.2|106.9|35.4|36.0|38.0|32.6|35.5|34.9|31.4|30.6|
|Durables|140918|1.4|2.8|1.5|1.8|1.8|1.4|1.5|1.4|.|1.9|
|Enterprise property (incl. livestock)|140918|5.2|19.4|4.6|5.8|6.5|4.7|5.3|5.1|4.9|5.0|
|Financial wealth (excl. loans)|139797|0.3|6.1|1.9|2.9|4.0|3.0|3.2|2.8|2.6|2.6|
|Loans|139797|1.4|2.8|2.4|1.6|1.2|1.4|1.2|1.2|0.9|1.0|

Note: wealth variables winsorized at 1%. The value of household durables was not available in 2015. A change in education categorization makes 2015 data for tertiary education incomparable with other rounds.

## 3.2. Variables of interest

We extract the measures of household wealth, income and consumption listed below from the 2001-2018 rounds of the PSLM survey. They are inflated to 2011 Pakistani rupees and adjusted for regional differences by 5