Impact of Labour Force Participation on Economic Growth in Pakistan

Abstract

This study found the short run and long run relationship between the economic growth, labour force participation and gross fixed capital formation. The time series data is used from the time period of 1980 to 2012 which is collected from Pakistan Bureau of Statistic, State Bank of Pakistan and World Bank. Initially Augmented Dicky Fuller and Phillip Perron tests are used to that shows gross fixed capital formation is stationary on first difference but other variable station on level and intercept. Furthermore, Johnson Co-integration test shows that the long run relationship exist between the variable. The vector error correction model indicated that economic growth has negative insignificant, gross fixed capital formation positive significant and labour force participation has negative significant relationship in short run.

Keywords: Labour Force Participation, Gross Fixed Capital Formation.