NAME: MARYAM

ROLL NO: 21-11104

COURSE CODE: 422
SECTION: B
TERM PAPER
SUBMITTED TO: M.ALI BHATTI
 SUMMARY 1
Research Questions:
 What is the long run relationship between financial sector development and
unemployment in Pakistan?
 What is the direction of causality between financial sector indicators and
unemployment?
Variables
The variables used in this study are unemployment rate and financial sector
department M2 minus currency in circulation to GDP ratio, Credit to private sector to
GDP ratio, assets with the State Bank of Pakistan to GDP ratio and average market
capitalization to GDP ratio were used as the proxies for financial sector development.
Conclusion of the study:
The financial sector act as a catalyst to economic growth and it holds a very important
role in developing the countries activities. Financial system gives information about
investments that can be used and plays an important part in the efficiency and
improved productivity in a modern economy. If this part is disrupted then it could
lead to economic issues like unemployment. However, the objective of this study is to
find the role of financial sector in unemployment and to check the direction of
causality between financial sector development and unemployment in Pakistan. The
government should focus on t\he private sector in credit disbursement decisions to
increase the job opportunities and improve economic development
Result:
The model used in this research is annual time series data including several variables
of financial sector and economic development over the period of (1973-2007) were
taken. The auto regressive distributed bounds testing approach is applied to examine
the cointegration relationship between financial sector development and
unemployment. Error Correction coefficient indicated a stable long run relationship
between financial sector development and unemployment rate in Pakistan. In the
Long run M2 minus currency in circulation to GDP ratio had a positive effect on
unemployment rate while credit to private sector to GDP ratio, assets with the State
Bank to GDP ratio, and the average market capitalization to GDP ratio showed the
positive effect on employment rate. A bi-directional causality between the credit to
private sector/GDP and unemployment rate implied that unemployment rate can be
arrested with the help credit disbursement to private sector leading to increase in
private investment in the economy. The study suggests that a well-developed financial
sector is plays a vital role in to economic development.

SUMMARY 2
Research Questions:

Research Questions of this paper is as follow;

 What cause the unemployment in economy of Pakistan?

 What is the relationship between higher education development and
unemployment in Pakistan by using the annual time series data from the
period of 1973 to 2020?
 What is tradeoff between inflation and unemployment?

Variables:

Variables of this paper are Population growth and foreign direct investments.

Conclusion of the paper:

Unemployment is a problem that affects people all around the world. This is
becoming a big issue in both developing and industrialized countries. It's a recurring
issue for many states, and it's tough to address. Different dimensions can be used to
examine unemployment. However, the focus of this research is on the factors that
influence unemployment. It is suggested that the government concentrate on foreign
capital. Government initiatives should be implemented to entice international people
to invest as well as invest. In order to manage unemployment, the government needs
likewise regulate inflation rates. Authorities should be aware of which rates of GDP
are most effective in reducing unemployment. The country needs strategies to slow
the rate of population increase.

Result:

The outcomes of this study are determined using the ordinary least square model.
Foreign investment, the GDP rate, and the CPI-based inflation rate all have a negative
influence on unemployment, according to the findings of this article. Unemployment
has a positive link with population increase, and it leads to joblessness.

The tradeoff between inflation and unemployment was also established in this study.
H1 was rejected in this study, however H2, H3, and H4 were found to be acceptable.
Foreign direct investment, rising prices, and national income all have a significant
connection with unemployment, according to the paper. Unemployment has a positive
link with population increase, and population increase leads to unemployment.
Population increase, according to the conclusions of this article, is one of the most
important predictors of employment rate. The ratio between inflation and
unemployment in the Pakistani economy is also examined in this article. However,
further study is needed to determine if this tradeoff is short-term or long-term.

SUMMARY 3
Research Question:
 What is the relationship between employment rate and the factors that
influence it in Pakistan?
 What are the variables that contribute to unemployment?
 What are the trends of the study's explanatory factors?
Variables:
Variables of this paper are Population growth and foreign direct investments.
Conclusion of the paper:
Pakistan's literacy rate has improved over the previous few years, demonstrating the
government's efforts. Strict efforts are being made, and the country's law and order
situation is improving. The next elections are expected to provide political stability to
the country. To combat unemployment, the government is offering microloans and
launching a slew of self-employment/rozgar program. The government is also
working to ease investment policies in order to attract big businesses to invest in
significant sectors and create jobs on a broad scale. However, giving technical
facilities as well as training to talented jobless people at a grass roots level is another
grey area where there is still more to be accomplished. A significant budget must be
set out for the education as well as research & design sectors. On the other hand, the
government is slashing already fixed budgets in this area, which might prove deadly
to boosting employment rates.
Hypothesis
H0: There exists no relationship between unemployment and population growth,
Interest rate, literacy rate, GDP, FDI in Pakistan.
H1: There exists relationship between unemployment and population growth, Interest
rate, literacy rate, GDP, FDI in Pakistan.
Hypothesis Testing
T statistics
T calculated values for GDP and Literacy rate are greater than T tabulated, so null
hypothesis was rejected that there exists no relationship between GDP, Literacy rate
and unemployment.
F Statistics
F-calculated is greater than F-tabulated, so null hypothesis was rejected that there
exists no relationship between GDP, Literacy rate and unemployment.

Result:
The model used in this research is regression model and data of unemployment,
literacy rate, population growth, interest rate FDI and GDP was taken from 1980 to
2010. The findings are at odds with the current literature. The trend in unemployment
does not reveal any significant changes, but growing unemployment in 2009-10 is
owing to a worsening law and order situation as well as political instability. In such
circumstances, investors found Pakistan to be an unappealing place for doing
business, and many withdrew their businesses from the nation. This resulted in a rise
in unemployment. The relationship between literacy rate and unemployment rate is
positive, indicating that as literacy rates rise, there will be a mismatch between a
person's qualifications and job description, causing people to remain jobless in pursuit
of a better work opportunity.

REFERENCE

Shabbir, G., Anwar, S., Hussain, Z., & Imran, M. (2011). Contribution of Financial
Sector Development in Reducing Unemployment in Pakistan. International Journal of
Economics and Finance, 4(1).
Arslan, M., & Zaman, R. (2014). Unemployment and its Determinants: A Study of
Pakistan Economy (1999–2010). SSRN Electronic Journal. Published.
https://doi.org/10.2139/ssrn.2515075/
Kamran, Asif & Shujaat, Sobia & Syed, Nadeem & Ali, Syed. (2014). A Study on
Determinants of Unemployment in Pakistan. Lecture Notes in Electrical Engineering.
242.