ISSN: 1998 - 4162

JISR MSSE Journal Contents

Volume 18, Number 1, January 2020


Gender Based Labor Force Participation and Wage Gap in Pakistan: Does Globalization Matter?
Moniba Sana - , ,
Atif Ali Jaffri - , ,


Abstract
This study has investigated impact of globalization on gender based gaps in labor market (GBGLM) of Pakistan for the period 1982-2017. Particularly, the study has estimated the impact of trade openness(OPEN), foreign direct investment(FDI), workers’ remittance inflows(WRI) and exchange rate(ER) on gender based labor force participation rate differential (LFPRD) and wage differential (WD). The study has applied Autoregressive Distributed Lag (ARDL) model and Johansen’s cointegration approach on two models estimated for LFPRD and WD. The error correction models (ECM) have confirmed error correction mechanism as reflected by negative and significant coefficients of lagged ECM terms. The study has applied all relevant diagnostic tests to ensure validity of empirical findings. The results of the study indicated that in the long run OPEN reduced LFPRD and WD, whereas, FDI augmented LFPRD. ER depreciation reduced LFPRD and augmented WD. WRI also augmented LFPRD and WD. The study concluded that OPEN and Real GDP are prominent factors in reducing WD and LFPRD of Pakistan, whereas, FDI and WRI augmented LFPRD. This is very important finding in the context of stagnant real sector of Pakistan where agriculture and industry have performed lower than rapidly growing services sector of Pakistan. Since most of the exports emanate from real sector of Pakistan, therefore, relatively more focus on real sector as compared to financial inflows can play crucial role in reducing GBGLM of Pakistan. The policy implication based on results is that to reduce GBGLM of Pakistan, trade liberalization with special focus on commodity producing sector is right policy option in Pakistan.

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