Gender wage disparity and economic prosperity in Pakistan

Abstract

The present study is designed to examine the relationship between wage inequalities and economic prosperity in the case of Pakistan. Using provincial-level data for the years 2000 to 2020, the study estimated a multivariate regression model by employing Auto Regressive Distributive Lag (ARDL) pooled mean group (PMG) technique. The results reveal that wage inequality, government development spending, labor force participation, and human development significantly affect economic prosperity. It is concluded that gender disparity in the labor market is the main hurdle in the economic wellbeing of the masses in the country. Reducing the differences in wages will enhance overall economic prosperity. The government and private sector should take collaborative measures to reduce wage disparities between the male and female workforce. The study also suggests that government should increase development expenditure, especially on health, education, and social infrastructure, to increase economic prosperity.

Keywords:

• Gender wage gap
• economic prosperity
• labor force participation rate
• human development
• development expenditure

JEL Classification:

• E24
• J21
• O15

Public interest statement

The gender wage gap is the difference in earnings of male and female workers. In the case of Pakistan, this disparity is estimated to be 34 percent which is much higher than the global average of 23 percent. Many researchers have found that this wage gap hinders economic prosperity because it hampers women from exhibiting their full potential. It also slows down the process of human development because women, if economically sound, tend to spend more on their children’s health care and education. The present research aims to empirically estimate the impact of the gender wage gap on economic prosperity in Pakistan. The results indicate that if the wage gap is decreased by 1 percent, economic prosperity can significantly increase by 4.2 percent. The research suggests some practical steps to reduce the existing wage gap like increasing the job quota for females, investing in their health and education to make them economically more productive, and stopping the discrimination in job markets.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. The study included the wage data of major occupational groups of both sexes (male and female). In the beginning, in LFS for both sexes’ wages, legislators, senior officials, manager’s professionals, technicians, associate professionals, clerks service workers, shop, market sales workers skilled agricultural, fishery workers craft, related trades workers plant, machine operators and assemblers elementary (unskilled) occupations were included in major occupational sectors. Later on, sales workers were also included in major occupational sectors. In recent LFS’s, the forestry sectors also merged in major occupational sectors for both gender while the remaining sector persist same in Labor Force Survey by wage group as major occupational groups and sex.

Additional information

Funding

The authors received no direct funding from any government or private source for this research.

Notes on contributors

Atif Khan Jadoon

Atif Khan Jadoon is working as Assistant Professor at the School of Economics, University of the Punjab, Lahore, Pakistan. His areas of interest include International trade, Issues particularly related to globalization in developing countries.