Electricity generation as a determinant of unemployment in Pakistan
| Pages | 102-112 |
| Date | 06 June 2016 |
| Published date | 06 June 2016 |
| DOI | https://doi.org/10.1108/JCEFTS-03-2016-0010 |
| Author | Adnan Rashid,Anwaar Ul Haq |
| Subject Matter | Economics,International economics |
Electricity generation as a
determinant of unemployment
in Pakistan
Adnan Rashid
Department of Commerce, University of Sargodha, Sargodha,
Pakistan, and
Anwaar Ul Haq
Department of Management Sciences, University of Lahore,
Lahore, Pakistan
Abstract
Purpose – The area about unemployment and its participation in the economic progress has been widely
debated in literature. A signicant number of studies on this impediment of economic boom have been found
to consider the concept through Okun’s law. This study aims to apply some different approach and re-dene
the model about determinants of unemployment via inclusion of electricity generation in it. The purpose here
for such consideration is the redenition of determinants to clearly examine the role of each participant in
solution of the problem.
Design/methodology/approach – This study for accomplishment of subject matter considers
macroeconomic determinants of unemployment and includes electricity generation process in model. Such
model is then empirically tested via structural vector autoregression (VAR) and impulse response function.
Findings – The empirical analysis of the study by stating the presence of long-run association comprehend
the ndings of most of the previously held studies on the subject matter. In addition to such co-integration,
the presence of long-run restriction validates the main research question by explaining the negative
relationship of GDP and electricity generation with unemployment of the country. Additionally, the
responses of impulse function further validate the hypothesis by stating the more response of both electricity
generation and GDP than any other variable in elucidating the problem of unemployment.
Research limitations/implications – The main limitation of this study is its restrictive use of
electricity generation as a source of power generation. One can use other sources of power generation in
addition to electricity generation in the study. Furthermore, this study only applies the concept of
macroeconomic variables for getting the solution of problem. Besides macroeconomic factors, a number of
microeconomic factors are also present that in addition to above mentioned macroeconomic variables help
the policy makers to elucidate the problem.
Originality/value – The originality of this paper lies in its concept about involvement of electricity
generation in determinants of unemployment. To date, no such study has been found in existing body
of literature that has investigated the problem from this perspective, and, hence, this study represents
contribution of authors to the area of literature.
Keywords Pakistan, Unemployment, Electricity generation, Impulse response function, SVAR
Paper type Research paper
Introduction
The aftershocks of the recent nancial and economic crises are still observed in most of
the developing and Third World nations. The rst and the foremost effect observed
from such crises is the rapid growth in the unemployment level. This experience of
The current issue and full text archive of this journal is available on Emerald Insight at:
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JCEFTS
9,2
102
Journalof Chinese Economic and
ForeignTrade Studies
Vol.9 No. 2, 2016
pp.102-112
©Emerald Group Publishing Limited
1754-4408
DOI 10.1108/JCEFTS-03-2016-0010
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