Fiscal Decentralization and Employment in Pakistan

Abstract

Study emphasis that a successful fiscal decentralization process is a way to increase the participation of citizens in local level development and economic activities. Study explores that the fiscal decentralization has positive effect on employment generation while the negative relation with inflation and indirectly supports the positive relation with economic growth. Improvement in educational activities and economic integration promote employment activities in the state and fiscally decentralized economy has greater ability to promote these activities then the unitary governments. So, fiscal decentralization is a successful tool to promote employment activities, meanwhile it discourages the rise in nominal wages which contributes to higher inflation rate.