Journal Article

Can Sectoral Re-allocation Explain the Jobless Growth? Empirical Evidence from Pakistan

Haider, Azad

2010

Overview

This paper explains sectoral re-allocation as a factor underlying the jobless growth for Pakistan by using aggregated employment data for seven sectors of the economy over the time period 1967-2008. The analysis employs four commonly used measures of sectoral reallocation proposed by Lilien (1982), Groshen and Potter (2003), Rissman (1997), and Aaronson, Rissman, and Sullivan (2004). Recent changes in the use of capital-based foreign technology have resulted in substitution of labour with non-labour inputs. Employment shifts between industrial sectors are often witnessed as indicators of structural change in an economy. The findings of this paper suggest that the economy of Pakistan underwent structural changes during the periods of recession and recovery. It appears that the structural changes were more pronounced around the time of the 1969 recession than that of 1991. A plausible explanation for this result might be the significant shifts in employment from agriculture towards the services sectors. It is concluded from evidence that sectoral reallocation is one of the major causes of the jobless growth in Pakistan.

• Publisher: Pakistan Institute of Development Economics
• Subject: Analysis / Beschäftigungseffekt / Developing countries / Economic activity / Economic conditions / Economic fluctuations / Economic growth / Economic growth rate / Economic indicators / Economic recessions / Economic recovery / Economic sectors / Economics / Employment / Growth recessions / Industrial agriculture / Industrial sectors / Industrialized nations / INFORMAL ECONOMY, URBANISATION AND LABOUR / Labor market / LDCs / Pakistan / Productivity / Recessions / Statistics / Unemployment / Wirtschaftswachstum