Empowering Pakistan’s Economy: The Role of Health and Education in Shaping Labor Force Participation and Economic Growth

Muhammad Umair, Waqar Ahmad (), Babar Hussain, Costinela Fortea, Monica Laura Zlati and Valentin Marian Antohi
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Muhammad Umair: Department of Economics, Emerson University Multan, Multan 60000, Pakistan
Waqar Ahmad: School of Economics, IIIE, International Islamic University Islamabad, Islamabad 44000, Pakistan
Babar Hussain: School of Economics, IIIE, International Islamic University Islamabad, Islamabad 44000, Pakistan
Costinela Fortea: Department of Business Administration, Dunarea de Jos University of Galati, 800008 Galati, Romania
Monica Laura Zlati: Department of Business Administration, Dunarea de Jos University of Galati, 800008 Galati, Romania
Valentin Marian Antohi: Department of Business Administration, Dunarea de Jos University of Galati, 800008 Galati, Romania

Economies, 2024, vol. 12, issue 5, 1-21

Abstract: The labor force is a crucial factor in conducting economic activities, especially in labor-surplus countries like Pakistan. In this study, we explore the impact of labor force participation (LF) on economic growth (EG), with an emphasis on how this impact depends on the levels of health and education expenditures. We analyze time series data from Pakistan spanning from 1980 to 2022, using ARDL (Autoregressive Distributed Lag), ECM (Error Correction Model) and Granger causality techniques for empirical analysis. The ARDL results indicate that LF significantly boosts EG, both in the short and long run. Furthermore, the estimations reveal that better facilities for health and education strengthen the positive effects of LF on EG. This suggests a complementary relationship between health, education, and LF in driving EG. Moreover, our findings highlight the temporal significance of health and education: Health plays a more crucial role in the short run, while education’s impact is more substantial in the long run. Furthermore, the Granger causality results indicate that LF, health, and education significantly contribute to EG. It is advisable for the government to prioritize investments in the health and education sectors. This approach can empower individuals to actively and effectively participate in economic activities, eventually contributing to the overall economic output of the nation.

Keywords: labor force participation; economic growth; health; education; ARDL (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2024
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