Munich Personal RePEc Archive

Inter-Relationship of Gross Domestic Product (GDP) Growth and Unemployment in Pakistan (1960-2005)

Khan, Abdul Qayyum Khan and Khattak, Naeem Ur Rehman Khattak and Hussain, Anwar Hussain (2008): Inter-Relationship of Gross Domestic Product (GDP) Growth and Unemployment in Pakistan (1960-2005). Published in: Journal of Law and Society , Vol. XXXVII, No. 51 (2008): pp. 77-84.

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Abstract

This paper critically analyzes the effect of growth in real GDP on reduction in unemployment. In this paper deviated value of GDP and unemployment from long term trend is used. Annual data for the period 1960-2005, taken from Economic Survey of Pakistan and International Financial Statistic is used for analysis. The study revealed that growth in real GDP is negatively related to unemployment. The negative effect of GDP growth on unemployment reduction is low, implies that other factors like lose employment policies and non availability of professional skills retard the employment generating capacity of GDP growth rate. The results signify the threshold level of GDP growth rate. Based on the findings of the study it is recommended that market based economy development is needed. Privatization which is believed to be depending on efficiency may help in this regard. Long term skill development and merit based recruitment policies may also accelerate employment generating capacity of output growth. If government of Pakistan want to retard unemployment they must maintain GDP growth rate above the threshold level other wise unemployment will rise instead of retarding it.

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