Output Growth and Employment Generation in Pakistan

Abstract

Human resources have emerged as one of the most important sources of economic growth and development. However, Pakistan has ignored human development and the result is that it is facing high unemployment. Present study aims at exploring the employment generation capacity of the economy of Pakistan. The economy is divided into six distinct sectors and the contribution of each sector towards creation of employment opportunities is analyzed; both in short run and long run. Labor force imbalances and the resulting unemployment are pointed out by utilizing ARIMA methodology. The sectoral employment elasticities are low and decreasing over time. It may be so due to increasing trend of using capital intensive technology. The empirical projections indicated that Pakistan is suffering from high unemployment and it is expected to rise over 14 percent by the year 2020. Therefore, appropriate policies are needed not only to combat this issue but also for optimal utilization of human capital. Overall growth as well as employment generating sectors need to pay appropriate attention to tackle the issue.