Impact of Globalization on Aggregate and Agricultural Employment in Pakistan

Abstract

This study has empirically investigated impact of globalization on aggregate and agricultural employment in Pakistan for the data period 1986-2017. Globalization is proxied by variables trade openness, foreign direct investment, workers’ remittances and exchange rate. Other explanatory variables are real GDP, gender based wage gap and labor force. The study has applied Johansen’ cointegration technique and Error Correction Model to estimate the long run and short run relationships. The findings of the study indicate that in the long run trade openness has negative whereas FDI has positive effect on aggregate as well as agricultural employment in Pakistan during the data period. Interestingly, exchange rate and workers’ remittances affect aggregate and agricultural employment differently. Other important finding is that real GDP and gender based wage gap also deteriorate aggregate and agricultural employment in Pakistan. The study concluded that globalization in the form of trade openness has not supported employment whereas FDI enhanced employment in Pakistan. Policy makers need to consider sector specific effects of globalization while designing policies to achieve inclusive growth in Pakistan.