Impact of Urban Occupational Employment and Unemployed Labor Force on Economic Growth of Pakistan: A time Series Analysis

Abstract

Employment intensity of economic growth is known as a linkage between employment and growth (also called employment elasticity).Which always vary between developing countries .Increasing the employability of poor people specifically women and youth enhances their contribution and benefit from the economic growth. This study aims to bridge some of the gap between a perceptive understandings that investment in urban employment is crucial for unemployment reduction and accelerate the economic growth. This study is an attempt to estimate the relationship between percentage of   employed Persons by major urban Occupations, unemployed labor force and economic growth of Pakistan. Gross Domestic Product in million rupees is taken as a proxy for economic growth of Pakistan as an independent variable.  Data of unemployed labor force and data of employed persons by major occupations in urban areas like (Administrative and Managerial workers, Agriculture and Fishery workers, Clerical workers, Professionals and Technical related workers and Services workers) is utilized for the span of 1973-2007. Johnson’s Cointegration, long run analysis, short run Error Correction model (ECM), and Granger Causality technique is applied for estimation. Result   shows that percentage of   employed Persons by major urban Occupations have significant impact on economic growth of Pakistan. Moreover, unemployed labor force is found to be negatively correlated with economic growth and leads to significantly decline in growth. Study purposes that the Government should promote urban occupational employment level to reduce unemployment and bring multinational companies in the country and also encourage entrepreneurial activities in the country for extensive urban employment opportunities.