Employment Implications of Economic Liberalization: ARDL Based Evidence from Pakistan

Abstract

The current study attempts to investigate whether economic liberalization influences employment in Pakistan or not. Despite the traditional analysis, our study has employed the multiple indicators of economic liberalization (trade liberalization, foreign direct investment, and remittances) and checked the effect of each indicator on the employment level. Time series annual data for the period 1980 to 2018 has been used for empirical analysis. After checking for the stationarity of data, the study proceeds with the ARDL approach. The empirical results of the study have proved that employment is sensitive to each indicator of economic liberalization. All indicators of economic liberalization are positively and significantly affecting the employment level in Pakistan's economy in the long run as well as in the short run. The provision of public infrastructure also promotes employment levels in Pakistan. The government should take policy measures for promoting free trade, encouraging foreign inflows, exchange rate regulation, and liberalizing markets. Keywords: Employment, Trade Openness, Remittances, Foreign Flows, Public Investment