Education, Health and Employment in Pakistan: A Co-integration Analysis

Abstract

Education and health both are essentials for development strategy of any economy. They also play vital role in enhancing productivity, economic growth and employment level. By providing equal opportunities of education and health to all citizens of any nation, all types of disparities can be eliminated. Considering the importance, the present study highlights some of the significant features of education and health in advancing employment level in the long run as well as in the short run. The analysis also incorporates the causality investigations based on VAR and VECM. Keeping in mind, the research uses time series data for the period from 1972 to 2010. With the aim of long run and short run estimates, we have taken Johansen Co-integration test and Vector Error Correction model respectively.

The long run results exhibit that educational expenditure, total enrollment, number of hospitals, health expenditure and gross fixed capital formation are momentous features in magnifying employment level in Pakistan. Speed of adjustment term suggests that short run variables are converging towards long run equilibrium by taking 7 percent annually adjustments. At the end, it is suggested that there should be more expenditure on education to promote enrollment at primary and professional levels by offering scholarships to students. For better health and education, Govt. should augment health expenditure as well.

Keywords: Educational Expenditure, Total Enrollment, Number of Hospital, Health Expenditure, Employment, Co-integration analysis, VAR & VECM based Causality.