Informal Labor Market in Pakistan: Evaluating the Effectiveness of Government Relief Programs using Econometrics and Machine Learning Approach

Muhammad Ali, Said Bin Zainol, Waqar Ameer and Muhammad Ali Husnain

Journal of Economic Impact, 2025, vol. 7, issue 3, 231-244

Abstract: This paper provides a comprehensive empirical analysis of the efficacy of social safety nets within Pakistan's labor market, with a specific focus on periods of significant economic shock. Utilizing a mixed-methods approach, we combine household-level microdata from the Pakistan Social and Living Standards Measurement (PSLM) surveys with administrative data on major relief programs, such as the Benazir Income Support Program (BISP). Our research assesses the targeting efficiency, coverage, and welfare impact of these transfers on key outcomes, including poverty headcount, consumption smoothing, and labor force participation. The findings reveal a critical paradox: while these programs provide essential relief to documented segments of the population, a significant efficacy gap exists due to Pakistan's vast informal sector. A substantial proportion of the most vulnerable, informal workers, remain systematically excluded from formal relief mechanisms, severely limiting the programs' overall protective capacity. The study concludes that the structural constraints of informality are a primary determinant of relief program effectiveness. We therefore recommend policy reforms aimed at integrating informal workers into the social protection framework through innovative targeting and delivery mechanisms to enhance resilience against future economic crises.

Keywords: Pakistan labor market; Social safety nets; Unemployment insurance; Informal employment; Poverty alleviation; Economic shock (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.scienceimpactpub.com/journals/index.php/jei/article/view/1105/663 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:adx:journl:v:7:y:2025:i:3:p:231-244

Access Statistics for this article

More articles in Journal of Economic Impact from Science Impact Publishers
Bibliographic data for series maintained by Iqbal Javed ().