Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 371 An Analysis of the Outcome of Socio Economic Factors on Mobility and Changes in Consumption Pattern in Northern Punjab, Pakistan Samra Khalid a , Nabila Asghar b , Hafeez Ur Rehman c a Assistant Professor, Higher Education Department, Government of the Punjab Lahore, Pakistan Email:samrakhalid88@yahoo.com b Associate Professor, Department of Economics and Business Administration, Division of Management and Administrative Science, University of Education Lahore, Pakistan Email: nabeela.asghar@ue.edu.pk. c Professor/Chairman, Department of Economics and Statistics, (HSM) University of Management and Technology Lahore, Pakistan Email: hafeez.rehman@umt.edu.pk. ARTICLE DETAILS ABSTRACT History: Accepted 28 August 2021 Available Online September 2021 The relationship between mobility and consumption pattern has been neglected in the past particularly in developing countries. Socio- economic mobility is the movement of individuals, social groups, or categories of people in the layers or strata between two different periods. For effective policy making, it is important to gauge the mobility pattern which portrays the socio-economic changes of society over the period as opposed to at one point in time. This brings up the need to examine the way in which elements of socio-economic mobility impacts the consumption in the emerging class of the society. Socio- economic factors and their influence on intra-temporal household mobility reveal the education as an important mediating factor in Northern Punjab. Whereas, opportunity of education and occupation work together to bridge the gap between an increase in household income and socio-economic status. This study concludes that education and occupation based mobility of households divert their consumption pattern toward more cultural goods. The emerging class seems to be attracted more towards conspicuous consumption including private schools, health care, shopping and the consumer goods to enhance their living standards. © 2021 The authors. Published by SPCRD Global Publishing. This is an open access article under the Creative Commons Attribution- NonCommercial 4.0 Keywords: Socio-Economic Mobility, Intra- Temporal Mobility, Cultural Consumption, Socio-Economic Factors, Positional Goods JEL Classification: O17, J62, J69 DOI: 10.47067/reads.v7i3.379 Corresponding author’s email address: hafeez.rehman@umt.edu.pk. 1. Introduction Socio-economic mobility is related to the changes in income, political power, skills and Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 372 education. The rise from lower to higher echelons in the society coincides with substantial changes in the income, education, skills, and other socio-economic indicators. Socio-economic mobility is determined by multiple factors such as social and cultural capital, inherited wealth and financial resources, labor market participation and occupation progression, educational achievements and geographical location (Bowles and Gintis, 2002). It is important for emerging society to measure the causes and changes in mobility due to the socio-economic factors and their impact on consumption pattern of the households over time. Most of the studies related to emerging economies measure the changes in consumption patterns and the direction in which the consumption of society has moved after the mobility. However, the consumption patterns, based on the complex human nature and behavior, vary as the households shift towards higher socio-economic echelons. Due to transformation, the variability in consumer’s behavior emerges not because of economic disparity of specific strata alone but also due to socio-cultural heterogeneity factors associated with other groups. In globalized economy, the researchers have tried to examine the way in which the dynamics of socio-economic mobility exerts influence on consumption patterns. The changes in consumption patterns describe the consequences of mobility through measuring the extent of characteristics of conspicuous and culture consumption as an effect of household mobility. In Punjab province no astounding endeavor has been made to dissect the socio-economic mobility over time which depends on base and final year of socio-economic indicators regarding the mobility of the society. Further the research work is limited in terms of the impact of mobility on the changes in consumption pattern in Northern Punjab. This study investigates how consumption behavior fluctuates as middle class households move from one financial strata to the next. Further, it measures the shape of consumption pattern of transformed households on the basis of socio-economic indicators in Northern Punjab, Pakistan. The main objective of the study is to develop the linkage between mobility and socio economic factors of Northern Punjab, which is a diverse and innovative thought in the literature of Punjab. The significance of the study is that it analyzes comprehensive structure of Northern Punjab in terms of causes and consequences of mobility. 2. Literature Review Since the beginning of current century, the researchers have tried to measure the effects of socio-economic mobility on consumption pattern in developed and developing countries. Several studies have identified the socio-economic factors responsible for intra-temporal household mobility. The review of previous studies may help us to identify the research gap regarding the relationship between socio-economic factors, mobility and changes in consumption pattern. Delorenzi (2006) points out that geographical mobility is an important source for people to achieve socio-economic mobility from backward areas to developed cities, as it improves their living conditions and provide better life chances for them as well as their children. His study concludes that economic migration is beneficial for the people having better occupation and it becomes significance source of high mobility in a well-established labor market. The study conducted by Paiva, Silva and Feijo (2013) point out that an increase in emerging class gives support to a boom in the domestic consumer market. While, the young group with higher education divert their consumption towards cultural goods including education items. Pintelon et al. (2013) bring up the existence of robust Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 373 relationship between income and material consumption. Their study describes that household income is the main source which brings changes in consumption pattern of cultural goods. Their study concludes that mobility and changes in consumption pattern are highly correlated and access to better educational facilities promote cultural consumption in a society. Uner and Gungordu (2014) observe that after the introduction of market liberalization in Turkey, the household of middle class gained sharp rise in disposable income and experienced substantial changes in life style. The results of the study reveal that the white collar professionals have gained relatively more benefits due to an improvement in education. Goldthorpe (2016) points out that educational policy is key to promote mobility. The education is a best positional good and the motivational factor that helps the individuals in improving their lifestyles. Song and Li (2016) mention that a strong association exists between household education and changes in consumption pattern. They are of opinion that middle-class families have more access to cultural capital than working-class families. Their study concludes that education has significant impact on the consumption of culture goods. Reeves and Vries (2018) point out that cultural consumption is often viewed as a form of personified cultural assets, which can be converted into economic income through education, technology, and research & development. The results of their study reveal that the households, who consume more on cultural activities, are more likely to earn high wages in future. The review of literature has identified several factors responsible for intra-temporal household mobility. Likewise, the socio-economic factors responsible for mobility and changes in consumption pattern after mobility in Northern Punjab have scantly been studied which is much needed. This study is an attempt to bridge the research gap by analyzing the relationship between socio-economic factors and mobility and observing the effects of socio-economic mobility on consumption pattern based on education, occupation, and income in the Northern Punjab. 3. Data and Methodology For analyzing the socio-economic patterns of the Northern Punjab, this study uses the primary data from the survey conducted by XYZ in 2017. This study analyzes the data from three districts, namely Sargodha, Bhakkar, and Rawalpindi. To ensure the reliability of the results, the analysis was limited to the data of the 45 – 65 year old respondents as they are supposed to be properly adjusted in the labor market based on their occupational income and educational achievements1. The data for two intervals: 2000 as the base year and 2017 as the final year of the same household were analyzed. The sample size for three district of Northern Punjab was fixed at 3522. Household with average literacy rate 65 percent were included in the sample as proportional to the population of each district (see Table 1 for details). 1The confirmation of age is based on the national identity card of respondents. 2 N Where P (1-P) and P shows the value of prevalence rate (overall literacy rate).Prevalence rate is calculated by average literacy rate of all districts of Punjab. ( ) Where n is district population N: total population of three districts of each zone. Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 374 Table: 1 District-wise Sample Size Northern Punjab District sample Urban sample Rural sample Rawalpindi, n = 172 64 108 Sargodha, n = 123 45 78 Bhakkar, n = 57 21 36 It is essential for estimation of mobility that the same number of observations of socio economic indicators for both base year and final year are analyzed. The year 2000 is considered as the base year to gauge the financial status of household and the year 2017 is considered as the final year to measure the current socio-economic status of families. The monetary cycle of 15 years is sufficient for measuring the structural changes in the context of intra-temporal household mobility. This study shifts from the intra-generational mobility toward intra-temporal household mobility, which indicates the extent of household transformation during the economic cycle due to collective occupation earning in labor market or combination of other socio-economic factors. The criteria of intra-temporal household mobility are presented in Table 2. Table 2: Criteria of Intra-Temporal Household Mobility (Analysis criteria of 2017) (Analysis criteria of 2000) Education (Average score of education of all household members), Education (Education score of head of household) Occupation (Average score of all earners of household) Occupation (score of head of household’s occupation) Total household income (occupation income) Base year income3. (The base year income is determined on the basis of occupation scale) Expenditure pattern Expenditure pattern Assets + living status (it is inherited and own hard work. Asset + living status (it is based on subjective criteria, self-administered). Socio-economic mobility of households is measured in terms of ‘n’ types of socio economic profile and each type of profile is composed of ‘i’ types of sub-indicators such as ( . These indicators are measured in the form of ordinal and dichotomous variables. A weight is assigned to each indicator which shows the importance of one variable relative to other variables included in socio-economic index. It also indicates the geographical importance of each variable in terms of urban and rural perspective. The raw scores of each unit are calculated after multiplying each socio-economic variable by an appropriate weight. Appendix II exhibits the socio-economic status index (SESI). 3 If Govt. employee defines the BS-scale and occupation department in year of 2000 with the help of pay scale chart/salary stage. If private employee defines the private institution scale and occupation department in year of 2000 with the help of pay scale chart define minimum wage rate for unskilled and semi-skilled worker in year of 2000 which is declare by government under minimum wage3 act Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 375 ∑ This study is divided into two parts: part I deals with the analysis of the relationship between socio economic factors and mobility of households; whereas, part II is related to the analysis of the impact of mobility on the changes in consumption pattern of the households in Northern Punjab. Part I The logistic model given below has been used to analyze the relationship between socio- economic factors and mobility. For this purpose, those socio-economic factors are included in the model which contributes in the intra-temporal household mobility from base year domain to the destination domain. Model 1 + + The description of the variables is presented in Table 3. Table 3: Description of the Variables Variables Description of Variable Dependent variable calculated through SES index. SES index based household is; 1= if households transform from one SE strata to another during 15 year economic cycle. 0 = otherwise. 1. Occupation improvement of head of households There are three categories of occupation of head of household; 0 = non- improved from base year, 1= Occupation progress from semi-skilled to clerical, 2= Occupation progress from semi-professional to professional. This variable is used to study the association between occupation progression of head of household and his upward mobility. 2. Level of education The average score of education members of all households, ‘0’ if X≤ 2.5, ‘1’ if X>2.5. Education creates sense of awareness about better life, which increases mobility. 3. number of dependent members of household Members less than 18 years and above 60 years of age are included in this variable. ‘0’ if X < 2, ‘1’ if X 2. This variable shows the negative relationship between the number of dependent members of households and upward mobility. 4. Number of Earning member The number of earning members among the total number of households, ‘0’ if X < 2., ‘1’ if X 2. This variable measures the association between more earning hands and upward mobility Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 376 5. Movement within country 1 = if households move toward other cities for betterment, ‘0’otherwise. This variable is used to study the association between inter-country movement and upward mobility for better education, occupation and family development. 4. Results and Discussion The results presented in tables 4 and 5 show that education level of household is positively associated with upward mobility. This indicates that educated households have more chances of upward mobility in 15 years economic cycle as compared to those who are uneducated. In Northern Punjab, the educated households have 23.3 times more chances of transformation toward upper strata due to more educated members in the family. Similar results have been reported by Forsyth and Furlong (2003), Breen and Jonsson (2005), and Platt (2006). In table 5, the results related to both urban and rural regions of Northern Punjab are presented. The coefficients of household education level are positive and statistically significant at 1% level of significance for urban and rural regions of Northern Punjab, i.e. 2.9 and 3.2 respectively. These coefficients reveal that average high level of education promotes chances of mobility in both urban and rural regions. These results support the arguments made by Miliband (2003) and Delorenzi et al. (2005). The number of dependent members of household is negatively related to upward mobility. The odds ratio less than unity indicate that more dependent members discourage mobility. The odds ratio is 0.43 which means that household who has more number of dependent members have 57 times more chances of no mobility as compared to the household who has less number of dependent members or more earning members. Hence, more participation in labor market is the protection against low degree of mobility. In urban and rural regions, the odds ratios are 0.32 and 0.28 respectively, which indicate that if households have more than two dependent members then the chances of their mobility is reduced by 0.68 and 0.72 odds respectively. Table 4: Socio-Economic Factors Analysis of Northern Punjab Variables expβ slopeβ p-values Household Education Level 24.272 3.189 0.0000 Number of Dependent Members 0.426 -0.854 0.0680 Earning Members 7.329 1.992 0.0000 Geographical Movement 5.306 1.669 0.0000 Occupational Progression: From Semi-Skilled to clerical Occupational Progression: From Semi-Professional to Professional 6.839 18.092 1.923 2.895 0.0000 0.0040 Constant -4.9 0.0000 Negelkerkey R-Square 0.53 Goodness of fit Test (x2) Hosmer-Lemeshow 8.6 0.0037 Source: Author’s own calculations The coefficients of earning members is positive and statistically significant at 1% level of Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 377 significance, which means that household with more earning members have 6.3 times more chances of upward transformation in Northern Punjab. The similar analysis holds for both urban and rural regions of Northern Punjab. Table 5: Socio-Economic Factors Analysis of Urban and Rural Northern Punjab Northern Punjab (Urban) Northern Punjab (Rural) Variables expβ slopeβ p-values expβ slopeβ p-values Household Education Level 19.533 2.972 0.0000 26.146 3.264 0.0000 Number of Dependent Members 0.323 -0.860 0.0610 0.280 -1.274 0.0390 Earning Members 15.51 2.017 0.0000 6.135 1.814 0.0030 Geographical Movement 6.110 1.810 0.0000 7.832 2.058 0.0000 Occupational Progression: From Semi-Skilled to clerical Occupational Progression: From Semi-Professional to Professional 7.214 17.180 1.976 2.844 0.0000 0.0050 7.945 11.157 1.073 2.412 0.0000 0.0020 Constant -4.8 0.0000 -6.9 0.0000 Negelkerkey R-Square 0.73 0.78 Goodness of fit Test (x2) Hosmer- Lemeshow 8.5 0.0037 10.3 0.0018 Source: Author’s own calculations The coefficient of geographical movement is positive and significant at 1% level of significance which indicates that geographical movement for higher education provides 4.3 times more economic opportunities for upward mobility as compared to those who have not experienced geographical movement. These results are consistent with Gibbons et al. (2005), Delorenzi (2006), Gibbons et al. (2005) and Murphy (2006). Furthermore, household geographical movements are 5.1 and 6.8 times in urban and rural regions respectively as compared to those who are un-mobile toward big cities. These findings are in aligning with Kenyon et al. (2003), and Warschauer (2003). The coefficient of occupation progression of head of household is positive and statistically significant at 5% level of significance. The results show that the chances of upward transformation are increased by 17.1 odds if the head of household has occupational transformation from semi-professional to professional. While the chances of upward mobility are 5.8 times high, if households have occupation progress from semi-skilled to clerical. The chances of upward mobility increases by 16.2 and 10.2 times if head of households have occupation transformation from semi-skilled to professional occupation in urban and rural regions of Northern Punjab respectively. Part II After measuring the level of mobility that society faces during 15 years of economic cycle in terms of improvement in socio-economic indicators, the consequences of mobility are analyzed in the context of changes in consumption pattern. The emerging households follow the consumption level of other families across the strata as they have to spend more in a society, where their income is low Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 378 relative to others. This is called as demonstration effect, which is regarded as the cost of mobility that society bears. The study uses expenditure pattern as an indicator of demonstration effect. Two situations may come up if household’s consumption exceed his income. The first situation put the household in the category of borrowers, if his basic expenditures are higher than his income. In second situation, the household is neither borrower nor saver, if his total expenditures (other than basic expenditures) exceed his income level due to demonstration effect. In this situation, the consumption pattern mostly lies in the category of positional goods. For analyzing the consumption behavior of household, in the context of demonstration effect, it is indispensable to consider positional goods. The details of positional goods are presented in Appendix I. Model 2 The consequences of mobility have been measured through two different models given below: = ………… (2A) In the above model, the dependent variable is related to the changes in consumption pattern of the transformed households from basic towards cultural goods in more than 15 years of economic cycle. If his consumption pattern shifts from basic expenditures to cultural goods, then the values of dependent variable will be ‘1’ otherwise ‘0’. = ………… (2B) In the above model, the dependent variable shows consumption pattern changes toward cultural and material goods simultaneously, as transformed households avail the emerging benefits of education, occupation and income which make them to divert their consumption pattern towards cultural and material goods. If the household’s consumption pattern shifts from basic to both positional and assets goods then the value of dependent variable will be ‘1’ otherwise ‘0’. All the independent variables are same in both models and the variables are incorporated in the model after the logistic regression assumptions are fulfilled. Table 6: Description of Variables (Consumption Models) Variables Description of Variable Occupation of head of household Based on the specific occupation held by the head of the household at current time, ‘0’, if Occupation progress from semi-skilled to clerical, ‘1’, if Occupation progress from semi-professional to professional. This variable is used to study the association between the occupation progression and changes in household consumption pattern. Mobile-classes divert their consumption pattern towards more material consumption to maintain and uplift their prominence due to increased material assets. 1. Education of other members Average score of educated member of household, ‘0’ if X ≤ 4.5 and ‘1’ otherwise. Education has direct and positive influence on changes in consumption pattern. Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 379 2. Income Monthly household per-capita income at current time period, ‘0’ if X 50000, ‘1’ if X 50000. This variables measures the total household income in qualitative terms with two categories, which shows the relationship between socio-economic stratification and changes in consumption pattern of transformed household. 4.1 Results and Discussion of Model (2A) and (2B) The education level of other household members has positive and statistically significant relation with changes in consumption pattern in Northern Punjab. Among the three dimensions, education is the single most powerful indicator relative to income and occupation which explains the direction of cultural consumption of transformed households of Northern Punjab by 19.7 times higher in households who have average education score higher than 4.5 as compared to others. While, the chances of more cultural consumption among educated household is 26.3 and 14.4 times more as compared to those household who average education level is less than 4.5 in urban and rural Northern Punjab respectively. It shows that most of the educated household members are inclined towards more cultural goods in their consumption portfolio. These results are in-line with Song and Li (2016), and Uner and Gungordu (2016). Table 7: Consumption Analysis of Northern Punjab (Model A) Dependent variable: consumption pattern shift from basic to cultural goods of mobile households during 15 years economic cycle Factor of Mobility Northern Punjab Northern Punjab (Urban) Northern Punjab (Rural) Odds ratios Coeffi cient p- values Odds ratios Coeffici ents p- values Odds ratios Coeffic ients p- values Education 20.77 3.03 .000 27.33 3.30 .011 15.45 2.738 .000 Household income 7.33 1.99 .001 17.06 2.83 .050 4.91 1.593 .019 Occupation progress 8.40 2.12 .001 12.24 2.50 .071 6.22 1.829 .009 Constant -29 (.000) -3.8 (.001) -2.3 (.000) Negelkerkey R square .68 .75 0.53 Goodness of Fit Test ( 7.8 (0.0016) 5.9(0.0011) 6.5 (0.0025) Source: Author’s own calculations The results of the study show that income has less impact on cultural consumption as compared to education and occupation progress. The households having income more than Rs. 50,000 have 6.3 times more chances to change consumption portfolio toward cultural goods in Northern Punjab. Similar results hold for urban and rural regions of Northern Punjab. The results of model (2B) suggest that among the three dimensions, income and occupation are more powerful indicators relative to education, which explain the consumption direction of mobile household toward positional and physical goods in Northern Punjab. In general, upward mobility plays Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 380 an important role in enhancing consumption of middle and privileged strata households. Education has a significant impact on cultural consumption while income boost the material consumption as intra- generational assets of transformed households. The study cannot deny the importance of income, as it is related to purchasing power and materializes the full potentials of the transformed households who have a bounty of resources but their educational achievements and occupation progress shape the direction of resources to consume. Our results are consistent with Ustuner and Holt (2010). The model (2B) explains that consumption pattern of households shift from basic expenditure toward positional and assets based goods during 15-year economic cycle. The results indicate that income is important factor which increases the household assets as compared to education. There exists positive relationship between income and consumption on positional and assets goods because households having more than Rs. 50,000 income are more likely to experience positional and assets based consumption in both urban and rural regions of Northern Punjab. The occupation progression has positive relationship with consumption on positional and assets goods. Occupation and income are the combined factors which change the consumption pattern toward material and assets goods. In terms of occupation progress from semi-professional to professional, the head of household have more chances by odds of 7.4 and 13.7 in urban and rural respectively to change their consumption pattern towards economic capital as compared to those having occupation transformation from semi-skilled to clerical. 5. Conclusion and Recommendations This study analyzes the impact of socio-economic factors which contribute in household upward mobility in Northern Punjab. Despite other socio-economic factors, educational achievements appear to be a strong predictor of socio-economic transformation of household. Furthermore, education turns up as a significant factor which changes consumption pattern from basis to cultural goods. The job opportunities in labor market are positively related to increase in volume of active occupation groups and privileged groups which lead to high intra-temporal household mobility. The earning factors of these groups play a significant role in more intra temporal household mobility due to increase in education and occupation expertise overtime. In Northern Punjab, education based mobile household spend a considerable amount of income on cultural goods which shows that if society wants to increase the consumption of cultural goods and services, it must increase the educational opportunities. Education is a strong element which boost the society’s cultural values in the light of more library visits, more participation in conferences and seminar, learning advance technology and conducting research for innovation. On the other side, income and occupation progress based on mobile households have strong relationship with positional goods and assets based consumption simultaneously as all these uplift socio economic status in society as compared to education. The results of the study show that education system and polices are highly important because suitable designed education policies can have a scope to counter education inequality and provide more education incentives to lower strata. It may help them to enter in the education industry after surrendering occupation market as child labor. The government should introduce concrete measures Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 381 for satisfying the unmet need of the societies through developing micro and small scale industry especially in rural areas for generating labor market activities. References Bowles, S and Ginitis, H. (2002). The Inheritance of Inequality. Journal of Economic Perspectives, 16 (3), 3–30. 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Review of Economics and Development Studies, Vol. 7 (3) 2021, 371-382 382 Appendix I: The Positional Goods 1 Shifting the residence toward posh area. 2 Hiring extra sweeper at home. 3 New brand of car as positional good 4 Expenditure on hoteling and shopping 5 New brand of mobile 6 More expenditure on children Appendix II: Socio-Economic Status Index (SESI) of Household Education Profile Occupation Profile Monthly Income Profile Expenditure Pattern Profile Living status Profile Education (rural + urban ) Occupation (rural + urban) Adjusted income of Adjusted income of Adjusted income of Expenditure pattern. Asset Urban region Asset Rural region Score Illiterate - < 1000 < 5000 <7000 - < 3 <4 0 Can read and write Unskilled worker 1000- 4999 6000- 14999 7000- 15999 Income is less than basic expenditure, Y < C, borrowers 3-5 5 -7 1 Primary Semi- skilled workers 5000- 9999 15000- 23999 16000- 24999 Income fulfill basic necessity of life expenditure Y = C, Survivors 6 -8 8 -10 2 High school Skilled workers 10000- 14999 24000- 32999 25000- 33999 Income fulfill basic and education expenditure Y = C 9 -11 11-13 3 Intermediate + specialized training Clerical 15000- 19999 33000- 41999 34000- 43999 Income fulfill basic and education expenditure, Y > C Pitiable saver 12-14 14 -16 4 Graduate Semi professional 20000- 24999 42000- 50999 44000- 53999 Expenditure on positional goods, Healthy Savers Y > C 15-17 17 -19 5 Master Professional 25000- 29999 51000- 59999 54000- 62999 Expenditure on cultural goods Y > C 18 -20 20 -22 6 Professionals/M.Phil Ph.D Executive class ≥ 30000 ≥ 60000 ≥63000 Expenditure on increase the value of assets/material consumption Y > C > 20 >22 7