An Empirical Analysis of Employment Status, Nature of Employment and Poverty Incidence in Pakistan

Abstract

This study measured poverty incidence and decomposition of poverty incidence across employment status, industry /sectors of employment and occupation of employment in Pakistan. Impact of employment status and nature of employment of household head on household poverty incidence is also analysed by employing logistic regression technique. The study used Pakistan Social and Living Standard Measurement Survey (PSLM) data set for the year 2013-14 for empirical estimations. A class of Foster-Greer-Thorbecke (1984) method is employed to estimate poverty incidence as well as decomposition of poverty incidence. The results showed that poverty incidence is about 36 percent in Pakistan in year 2013-14. Poverty decomposition results depicted that poverty significantly varies across employment status, sectors/industry of employment and occupation of employment. Employers, electricity, gas & water industry and legislative, senior official & managers group have lowest poverty incidence while sharecropper & paid employee, construction sector and elementary occupations had highest poverty incidence. The results of Logit Model indicate that age of the household head, education of the household head and  general employment of the household head are inversely related to poverty while being male as head, residence of household in rural area, household size and dependency ratio are positively related to poverty incidence. Employment of the household head significantly reduces while dependency ratio immensely increases the odds of being in poverty. Therefore, sufficient employment opportunities should be provided to all for massive reduction in poverty and sustainable development of the country. Employment of the household head as share cropper, paid employed & livestock only, in construction, transport & storage sector, and in elementary occupations etc. have higher prospect of being in poverty. Thus, for fabulous reduction in poverty government should implement minimum wage policy and provide social safety nets to enhance the income of these poor workers to bring them out of poverty.