Labour market dynamics in Pakistan: Evidence from the longitudinal data

Abstract

This study has examined labour market dynamics in Pakistan using two rounds of the Pakistan Socio-economic Survey PSES). Results show that the labour force participation rate for the total adult population increased from about 44 percent in 1998-99 to 48 percent in 2000-01. The level of unemployment jumped from 6.4 percent in 1998-99 to 11.5 percent in 2000-01. Data on the gross flows into and out of the three labour market states-employed, unemployed, and not in the labour force-show that transition from unemployment to employment was quite slow. More than half of the total current stock of unemployment consisted of short-term unemployed. More than a quarter of this stock was in the category of transitory unemployed while 15 percent were chronic unemployed. The present study shows that variables related to human capital of individuals such as age, education, and training have greater influence on the probability of making the transition from unemployment to employment. Government policies could be made more meaningful by improving the information flow about the job opportunities. Whereas education and training play a key role in finding employment, the quality of education needs to be improved and training opportunities may also be provided. Chronic unemployed may particularly be targeted for their adjustment in domestic labour market.