Abstract
While Zak¯ah has a significant effect on reducing income
poverty, its impact on multidimensional poverty (deprivation in health,
education, and living standard) has not been studied much. Since the
size of impact depends on accuracy of Zak¯ah targeting and its coverage,
this paper assesses the accuracy of Zak¯ah targeting and coverage by
computing Multidimensional Poverty Index (MPI) for Last Year’s Zak¯ah
(LYZ) recipients and LYZ non-recipients using Pakistan Social and Living
Standard Measurement (PSLM) survey (2014). The impact of LYZ transfer
on multidimensional poverty is estimated using Propensity Score Matching
(PSM) method to control for confounding factors by comparing treatment
(LYZ recipients) and control (LYZ non-recipients) groups. The higher
MPI of treated group shows accuracy of targeting. The average-treatment
effect (ATE), average-treatment effect on the treated (ATET), and potentialoutcome mean (POM) estimates show small impact of LYZ payment on
total weighted and individual deprivations in the short-run. However, the
statistical insignificance of ATE and ATET shows insufficient coverage
as well as the possibility of reaching out to income-poor, but not to
multidimensional-poor. This implies that public Zak¯ah committees should
disburse the Zak¯ah based on multidimensional poverty status for efficient
use of Zak¯ah funds for the alleviation of multidimensional poverty
Hamid Hasan, Salman Syed Ali. (2019) The Impact of Zakah¯ Transfer on Multidimensional Poverty: The Case of Pakistan, Journal of Islamic Business and Management, Vol ume 9, Issue 1.
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