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

Author

Listed:
  • Khan, Abdul Qayyum Khan
  • Khattak, Naeem Ur Rehman Khattak
  • Hussain, Anwar Hussain

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.

Suggested Citation

  • Khan, Abdul Qayyum Khan & Khattak, Naeem Ur Rehman Khattak & Hussain, Anwar Hussain, 2008. "Inter-Relationship of Gross Domestic Product (GDP) Growth and Unemployment in Pakistan (1960-2005)," MPRA Paper 42036, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42036
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    File URL: https://mpra.ub.uni-muenchen.de/42036/1/MPRA_paper_42036.pdf
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    More about this item

    Keywords

    GDP growth; unemployment; deviated GDP and unemployment; threshold level of GDP growth;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • A10 - General Economics and Teaching - - General Economics - - - General

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