PROBLEM STATEMENT:

We are trying to identify the determinants of youth unemployment in Pakistan.

ABSTRACT:
Unemployment, especially among young people, is a major problem in many
countries. Numerous countries, including Pakistan, are concerned about it. In this
work, we conducted an experimental investigation into the factors that influence
youth unemployment in Pakistan. This study examines youth unemployment and
the several reasons such as political uncertainty, a shortage of resources,
agricultural sector backwardness, and overpopulation. This analysis found that
young individuals aged 15 to 24 had been disproportionately affected by the
current recession. This is because the current youth group is rather large, the
longer-term outlook for youth unemployment is relatively optimistic, and there is
a compelling rationale for policymakers to address the challenges that the current
generation is experiencing now.

1. INTRODUCTION:
Unemployment has recently become a prominent topic, and it is increasing
rapidly over the world. The unemployment rate is a good indicator of a country's
economic health. Unemployment, according to (Amadeo, 2018) is defined as
people who are unemployed and actively looking for work. "Unemployment
happens when a person who is actively looking for work is unable to find work,"
according to ( Batu, 2016 ). "This comprises only those persons who are willing to
work and are either employed or looking for jobs." Young people are a valuable
resource and a critical component of every country's development and success.
The appropriate utilization of active, qualified, and brave youth can contribute to
the country's socioeconomic progress (Msigwa and kipesha,2013). Long-term
joblessness for young people can be damaging, resulting in "discourage workers"
and rejection from the employee market (Choudary, 2010). The United Nations
defines youth as those between the ages of 15 and 24. Some cultural and political
issues influence how youth are defined in different countries (O'higgins, 1997).
Different countries have different age groupings of youth, however the youth in
this study are between the ages of 15 and 24. The worldwide youth
unemployment rate was 13.6 percent of the youth employment force in 2019,
according to the (International Labour Organization 2020), and is expected to
rise by 0.1 percent in 2020 and even more by 0.1 percent in 2021. North Africa
had the highest young unemployment rate of 30.2 percent in 2019, followed by
Arab States with 22.9 percent. The lowest rates of youth unemployment were
8.7% in Sub-Saharan Africa and 8.8% in Northern America. As a result, it is
necessary to identify the reasons that are preventing young people from finding
work. Pakistan is also dealing with issues such as unemployment, particularly
among young people. In Pakistan, the nineties were marked by increased
unemployment as a result of lifeless economic growth as well as monetary
tightness. The restructuring and relaxation of public sector firms aggravated the
situation (Akhtar and Shahnaz, 2006). Pakistan's unemployment rate in 2014-15
was 5.9%, according to (Pakistan Bureau of Statistics 2018), and it changed and
fell to 5.8% in 2017-18, which is a positive change. Pakistani youth (aged 15 to
19) had an unemployment rate of 10.1 percent in 2014-15 and 10.4 percent in
2017-18, a rise of 0.3 percent. From 2014-15 (11%) to 2017-18 (0.6%),
Pakistan's young (ages 20-24) increased by 0.6 percent (11.6 percent).

As a result, despite some improvement in the overall, several scholars from

throughout the world have done studies on the factors that influence juvenile
unemployment. Geographic location, education, gender, skills, and marital status
were identified to be key determinants affecting youth unemployment in
Tanzania by (Msigwa and Kipesha 2013). According to (Assaad and Levison
2013), youth unemployment is exacerbated by increased environmental threats
and low job growth joblessness rate, Pakistani youth unemployment continues to
climb. According to (Kakwagh and Agnes 2010), the major causes of youth
unemployment in Nigeria are a high degree of geographical mobility, increasing
population growth, a lack of employable skills, the processes and perceptions of
policymakers and youth themselves about employment, and youth non-
involvement in decision-making processes. In Pakistan, several research were
conducted to determine the factors that influence unemployment and youth
unemployment. (Kalim 2003) did a study to determine the factors affecting
unemployment in Pakistan. In her research, she looked at two factors: GDP (gross
domestic product) and population. According to the findings, these two variables
played a significant role in the rise of unemployment in Pakistan. A study on
youth unemployment was conducted by (Akhtar and Shahnaz 2006). The
findings revealed that the GDP growth rate, service sector expansion, and private
sector expenditure reduce youth unemployment more than public sector
investment. (Maqbool et al. 2013) conducted another study to determine the
factors affecting unemployment in Pakistan. They looked at four parameters that
have a positive relationship with unemployment in Pakistan domestic, GDP, FDI
(foreign direct investment), and population. (Ahmad and Khan 2018) looked at
the factors that influence youth unemployment in Pakistan, including population,
government spending, wage rate, citizenship, and FDI. This research also aims to
identify the factors that influence young unemployment in Pakistan. (Ahmad and
Khan 2018) looked at the factors that influence youth unemployment in Pakistan,
including population, government spending, wage rate, ination, and FDI. This
research also aims to identify the factors that influence young unemployment in
Pakistan. Political instability, a lack of investment, overpopulation, and
agricultural sector backwardness are all factors evaluated in this study.
 2. LITERATURE REVIEW:
Unemployment has become a major source of concern in Pakistan, causing a slew
of economic issues, yet these issues can be addressed with smart resource
allocation. Because of their lack of educational and economic approaches, the
youth unemployment rate is rising in numerous countries. Unemployment is a
concern in Pakistan, particularly among the youth. Policymakers are failing to
produce realistic solutions to the unemployment problem. Unemployment among
young people has been a major problem in society. As a result, the researchers
were prompted to conduct this study on the factors that influence young
unemployment. The experts believe that once the causes of youth unemployment
are identified, the answer will be unquestionable.

2.1.1. POLITICAL UNCERTAINITY:

Pakistan's current unemployment is a result of the negative impacts of political

instability. Despite its vast natural resources, Pakistan is unable to prosper
economically, owing to political instability. Politics has dominated economic
decision-making in Pakistan, and political instability has hampered economic
growth (Taha, 2012). Unemployment is not just a societal ill, but it also has far-
reaching consequences. It causes discontent and melancholy among the youth
and encourages them to engage in bad activities like as terrorism, burglary, and
street crime. It irritates people on a political level. Votes are bought and sold (Ali,
2012). In a model with capital taxation and endogenous enlargement, (Devereux
and Wen,1998) introduce political instability and show that greater political
instability with sharply contrasting views of likings leads to lower development
rates and higher government spending. Political unrest could contribute to the
high unemployment rate. In fact, political instability creates a great deal of
ambiguity, which might weaken employee command and so increase
unemployment. A broad body of research has focused on the political economy of
government directives and the clash of political development with various aspects
of economic act permanence as a result of political destruction (Lucifora and
Moriconi, 2012). Political uncertainty is an issue that is deterring domestic and
foreign investment and investors from moving forward with plans to invest in
Pakistan. Various studies have concluded that youth unemployment has an
impact on monetary, social, and political stability. According to (Azeng and Yogo,
2013), political uncertainty causes youth unemployment to rise.

2.1.2. SHORTAGE OF RESOURCES:

There is a lot of writing on the subject of unemployment in Pakistan due to a

shortage of investment. According to (Shah and Zahir, 2003), if no investment is
made, there will be no output (company) and no job possibilities. Foreign direct
investment (FDI) is critical to every country's economic development (Khan et al.,
2018). It not only provides job possibilities, but it also contributes to economic
stability (Habib & Sarwar, 2013). Concentrate on the impact of FDI on
unemployment and welfare in the urban economy (Yabuuchi, 1999). To entice
investors, the Pakistani government offered a variety of investment incentives,
including tax breaks and infrastructure allowances. As a result of these factors,
investors are willing to invest in Pakistan because of location advantages such as
market size, raw material use rights, and access to skilled employees and security.
Then Pakistan's employment situation will automatically improve (Shah and
Zahir, 2003). The events that prevent investment in Pakistan, such as the holding
of foreign currency accounts, the military revolution, the annoyance of the
partially victorious liability compel to the military government, the 9/11 terrorist
attack, the Afghanistan war, and the nervousness on the Pakistan-India border,
have all contributed to the astonishment (Hyder and Ahmed, 2003). Investment is
critical for a country's economic progress, even so in Pakistan, the number of
investment opportunities has declined significantly in the previous five years (Ali
2020)( Ahmed, 2018). According to (Zeb, 2014), FDI can enhance employment
prospects in Pakistan.

2.1.3. BACKWARDNESS OF AGRICULTURAL SECTOR:

Agriculture, industry, and commerce are three types of industries that any state's
economy is depending on. Each sector's success is contingent on the others.
Pakistan is an agriculture-based country, hence agricultural advances are critical
for Pakistan. The agriculture industry is Pakistan's economic strength, although it
is beset by problems, including techno-economic, socio-economic, natural, and
financial issues (Khan and Bae, 2017). As a result of these factors, Pakistan's per-
acre output remains poor in compared to wealthy countries (Khan, 2012).
According to (Khan, 2011), the agriculture sector's backwardness is the primary
cause of unemployment in Pakistan. Agriculture is the most important sector of
the Pakistani economy, contributing 20.9 percent to GDP and employing 44
percent of the population directly or indirectly. There are two types of
unemployment in the agricultural sector. To begin with, the utilization of
cutting-edge technology and automation reduces the demand for workers.
Second, there is a scarcity of high-quality seeds, insecticides, and fertilizers, as
well as land reforms and inadequate agricultural education. The agriculture
sector is not growing as a result of all of these factors, which is causing
unemployment in the country.

2.1.4. OVERPOPULATION:

According to (Subhani, 2018), one of the major factors of unemployment in

Pakistan is overpopulation. According to (Worldometers 2020), Pakistan's
population is close to 201 million, making it the world's sixth most populous
country. People in Pakistan are unaware of the economic challenges that are
arising as a result of the high birth rate due to a lack of knowledge.
Overpopulation has a number of disastrous consequences, including low
agricultural development, high unemployment, and low per capita income
(Imtiaz, 2014). Because Pakistan's education system is inadequate, the country's
population is expected to expand, resulting in more uneducated people (Subhani,
2018). (Kalim, 2003) conducted research to determine the elements that
influence youth unemployment, and she concluded that Pakistan has a higher
population, which contributes to unemployment. In Pakistan, overpopulation is
obliterating job chances. (Maqbool, 2013) conducted research and discovered
that population and unemployment have a positive relationship. The development
of employment prospects for Pakistanis is being hampered by population