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Are Some Groups More Vulnerable to Business Cycle Shocks than Others? A Regional Analysis of Pakistan’s Labor Market

Mehak Ejaz () and Kalim Hyder ()
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Mehak Ejaz: Department of Economics, Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, Karachi, Pakistan
Kalim Hyder: Monetary Policy Department, State Bank of Pakistan, Karachi, Pakistan

Authors registered in the RePEc Author Service: Syed Kalim Hyder Bukhari ()

Lahore Journal of Economics, 2017, vol. 22, issue Special Edition, 199-231

Abstract: This study identifies the extent to which various socioeconomic groups are vulnerable to aggregate business cycle fluctuations. Socioeconomic groups are classified by gender, location, employment status, education, income and age cohort. The asymmetric behavior of aggregate economic growth indicates that some groups gain less during recovery and boom phases and are thus most vulnerable to recessions. A vulnerability index in calculated for different socioeconomic groups and the empirical results show that employers with a graduate degree in Balochistan are the most vulnerable group and that female workers are more vulnerable than male workers. Additionally, the study employs panel data on inflation and employment to investigate the implications of macroeconomic fluctuations on vulnerable groups. The results indicate that food inflation has a strong negative impact on real earnings, while nonfood inflation increases real earnings. The panel data and vulnerability index findings are consistent with each other. The study also presents policy implications for existing public social safety net programs and prospective private social innovation programs targeting vulnerable households.

Keywords: Business cycle fluctuations; socioeconomic groups; vulnerability; GMM; Pakistan; real earnings; gender (search for similar items in EconPapers)
JEL-codes: E24 E31 E32 J11 J16 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:lje:journl:v:22:y:2017:i:sp:p:199-231