Gender based Labor Supply, Income Diversicfication and Household Welfare in Pakistan

This dissertation deals with the development activities of rural household of developing world, where poverty is wide spread and agriculture sector alone is insufficient to provide subsistence. In Pakistan, more than sixty percent of the population lives in the rural areas. Agricultural labor is the most common way of employment. The exponential increase in population has further stressed the depleting rural resources and created inability of the agricultural sector to absorb large labor force ; consequently resulting in social and economic problems. Moreover, rural community is characterized by imperfect land and credit markets, missing insurance facilities and limiting access to inputs such as credit, fertilizer etc. Due to imperfect labor markets and lack of resources, household’s decision of labor allocation is affected. Thus, production and consumption decisions of the household are not separable, so household faces shadow wages which depend on the production technology and household’s preferences. Chapter 3 evaluates the labor supply behavior of rural households in Pakistan by using shadow wages which is vital for policy design to improve the welfare of the rural household. The functioning of labor market in Pakistan is tested by applying three tests of separability. All these tests strongly rejected the presence of perfect markets in Pakistan. Chapter 4 estimates the impact of non-farm work on the household welfare. The rural non-farm sector is growing rapidly, becoming an important source of income, attracting the large labor force, and contributing to rural growth. With regards to factors that influence the participation in non-farm work, probability of participation increases with increased level of education, adult household size, and physical infrastructure, while lack of access to land, livestock, and credit decrease the likelihood of participation in non-farm work, for both male and female. The study shows that non-farm work increases the welfare and reduces the poverty level of rural household. One of the key challenges in the developing countries is to increase investment in order to enhance productivity in small-scale farming, which is the main source of income and food security for poor rural households. The poor households are unable to do agricultural investment due to liquidity constraints and insecure property rights. Chapter 5 investigates the role of non-farm work and land rights on the investment in soil conservation and productivity enhancing practices. The study shows that non-farm participation and secure land rights tend to encourage more investment in long-term soil-improving measures and less to short-term productivity-enhancing chemical fertilizers. The findings also show that non-farm participation and secure tenancy arrangements have a positive effect on agricultural productivity. Findings suggest boosting up high return employment opportunities by reducing entry barriers and implying changes in land tenure system for agricultural growth.In den letzten Jahrzehnten wurde die Landwirtschaft als übliche Einkommensquelle in den ländlichen Regionen von Entwicklungsländern betrachtet. Aufgrund des starken Bevölkerungswachstums hat dieser Sektor jedoch mittlerweile ein geringeres Wachstumspotential. Darüber hinaus haben Risiken in der Landwirtschaft wie Wetter, Saisonabhängigkeit oder haushaltsspezifische und wirtschaftliche Schocks das Potential zusätzlich verringert. Deshalb ist es notwendig, sich auf den Sektor der ländlichen Entwicklung zu fokussieren. Die Entwicklung des nicht-landwirtschaftlichen Sektors wir oft als nutzenbringend bezüglich der Schaffung von Arbeitsplätzen, der Milderung von Armut sowie der Ernährungssicherheit, der Stabilität der ländlichen Einkommen und der Haushaltswohlfahrt. Diese Dissertation beschäftigt sich mit den Entwicklungsaktivitäten in ländlichen Haushalten in Entwicklungsländern, in denen Armut weit verbreitet ist und der Agrarsektor allein unzureichend ist, um den Lebensunterhalt zu sichern. In Pakistan leben mehr als 60% der Bevölkerung in ländlichen Gegenden. Die Landwirtschaft bietet die meisten Arbeitsplätze. Der stark ausgeprägte Bevölkerungszuwachs übt zusätzlichen Druck auf vorhandene Ressourcen aus und bringt soziale und ökonomische Themen an die Tagesordnung. Andere Faktoren betreffen unvollkommene Land- und Kreditmärkte, fehlende Absicherungsmöglichkeiten und eingeschränkten Zugang zu Ressourcen etc. Durch unvollkommene Arbeitsmärkte und den Mangel an Ressourcen wird die Haushaltsentscheidung bezügliche der Arbeitsverteilung beeinflusst. Daher sind Produktions- und Konsumentscheidungen eines Haushalts nicht voneinander zu trennen, da dieser sich mit Schattenlöhnen konfrontiert sieht, die wiederum von der Produktionstechnologie und den Haushaltspräferenzen abhängen. Das dritte Kapitel der Dissertation evaluiert das Arbeitsangebotsverhalten von ländlichen Haushalten in Pakistan mithilfe von Schattenlöhnen. Diese Bewertung ist grundlegend für die Politik, um die Wohlfahrt ländlicher Haushalte zu verbessern. Die Funktionsfähigkeit der Arbeitsmärkte in Pakistan wird durch die Anwendung von drei sogenannten "tests of separability". Alle Tests lehnen das Vorhandensein von perfekten Märkten in Pakistan ab. Im vierten Kapitel wird die Wirkung von nicht-landwirtschaftlicher Arbeit auf die Haushaltswohlfahrt beurteilt. Der ländliche nicht-landwirtschaftsbezogene Sektor wächst stetig und entwickelt sich damit zu einer wichtigen Einkommensquelle, zieht Arbeitskräfte an und leistet einen wesentlichen Beitrag zur ländlichen Entwicklung. Unter Berücksichtigung von Faktoren, welche die Teilnahme an nicht-landwirtschaftlicher Arbeit beeinflussen, steigt die Wahrscheinlichkeit der Teilnahme mit einem höheren Bildungsniveau, der Haushaltsgröße und physischer Infrastruktur und sinkt hingegen bei einem mangelnden Zugang zu Land, Vieh und Krediten. Dies gilt für Männer gleichermaßen wie für Frauen. Die Studie zeigt, dass nicht-landwirtschaftliche Arbeit die Wohlfahrt erhöht und das Armutsniveau von ländlichen Haushalten verringert. Eine der wichtigsten Herausforderungen in Entwicklungsländern ist der Einsatz von Investitionen, um die Produktivität kleinlandwirtschaftlicher Betriebe zu verbessern, welche die Hauptquelle für Einkommen der armen Haushalte in ländlichen Regionen darstellt und Nahrungsmittelsicherheit bietet. Arme Haushalte sind aufgrund von Liquiditätseinschränkungen und ungewisse Eigentumsrechte, nicht in der Lage agrarbezogene Investitionen zu tätigen. Kapitel fünf erforscht die Rolle von nicht-landwirtschaftlicher Arbeit und Landrechten auf die Investitionstätigkeit in Bezug auf Bodenerhaltung und produktivitätssteigernde Maßnahmen. Die Studie beweist darüber hinaus, dass die nicht-landwirtschaftliche Teilnahme und gesicherte Landnutzungsrechte langfristige, Boden verbessernde Maßnahmen begünstigen und den Einsatz von kurzfristig, produktionsverstärkenden chemischen Düngern einschränkt. Die Resultate zeigen zudem, dass nicht-landwirtschaftliche Teilnahme und gesicherte Pachtverträge einen positiven Einfluss auf die landwirtschaftliche Produktivität haben. Basierend auf unseren Ergebnissen wird eine Verstärkung von Beschäftigungsmöglichkeiten mit einem hohen Einkommensniveau vorgeschlagen, indem Eintrittsbarrieren verringert und Veränderungen in Grundbesitzstrukturen vorangetrieben werden, die ein landwirtschaftliches Wachstum fördern

A Time Series Analysis of Energy Consumption, Energy Prices and Economic Growth in Pakistan

The present study is conducted to investigate the impact of Energy Consumption (EC) on the Economic Growth (EG) in Pakistan by using a trivariate model. Time series data of macroeconomic determinants of Energy Consumption (EC), Energy Prices (EP) and Economic Growth (EG) are used to analyze the linkage among the variables. Annual data are collected from different published sources like World Development Indicators (WDI), BP Statistical Review and Economic Surveys of Pakistan for the period 1971-2014. Augmented Dickey Fuller (ADF) unit root test and Phillips Perron unit root test are used to examine the stationarity of data and all the variables are found stationary in differenced form. Short run and long run linkage among the variables is examined through Johansen co-integration test and the results confirm the existence of one co-integrating vector among the variables. Granger causality test under Vector Error Correction Model (VECM) is applied to observe the direction of between Energy Consumption (EC), Energy Prices (EP) and economic growth (EG). Unidirectional causality is found from Economic Growth (EG) to Energy Consumption (EC) and unidirectional causality from Energy Consumption (EC) to Energy Prices (EP) is also found in short run as well as in long run. On the basis of result of the study, conservation policy regarding to the Energy Consumption (EC) is suggested with a negligible or no effect on Economic Growth (EG)

Economic Analysis of Organic Wheat Production in Pakistan: Adoption and Return on Investment

The rising concern of conventional farming emphasized the need of organic farming which utilizes environment-friendly and economically-viable production methods. Pakistan has great potential but organic farming is not in practice. This study examined the constraints in adopting organic wheat and its impact on return on investment by employing farm level data of 300 wheat growers. We employ endogenous switching regression (ESR) approach that accounts for selection bias. The results show that organic wheat has significant and positive impact on the returns but adoption is slow due to number of limiting factors. Illiteracy, lack of information, liquidity constraint, complicated and costly certification process, absence of organic market and small land holdings are the major limiting factors for the adoption. Policy makers should focus to overcome the constraints of organic farming by providing easy, timely and adequate credit. Awareness and motivation of farmers should be done through education, training and extension services

A Time Series Analysis of Energy Consumption, Energy Prices and Economic Growth in Pakistan

The present study is conducted to investigate the impact of Energy Consumption (EC) on the Economic Growth (EG) in Pakistan by using a trivariate model. Time series data of macroeconomic determinants of Energy Consumption (EC), Energy Prices (EP) and Economic Growth (EG) are used to analyze the linkage among the variables. Annual data are collected from different published sources like World Development Indicators (WDI), BP Statistical Review and Economic Surveys of Pakistan for the period 1971-2014. Augmented Dickey Fuller (ADF) unit root test and Phillips Perron unit root test are used to examine the stationarity of data and all the variables are found stationary in differenced form. Short run and long run linkage among the variables is examined through Johansen co-integration test and the results confirm the existence of one co-integrating vector among the variables. Granger causality test under Vector Error Correction Model (VECM) is applied to observe the direction of between Energy Consumption (EC), Energy Prices (EP) and economic growth (EG). Unidirectional causality is found from Economic Growth (EG) to Energy Consumption (EC) and unidirectional causality from Energy Consumption (EC) to Energy Prices (EP) is also found in short run as well as in long run. On the basis of result of the study, conservation policy regarding to the Energy Consumption (EC) is suggested with a negligible or no effect on Economic Growth (EG)

Economic Analysis of Organic Wheat Production in Pakistan: Adoption and Return on Investment

The rising concern of conventional farming emphasized the need of organic farming which utilizes environment-friendly and economically-viable production methods. Pakistan has great potential but organic farming is not in practice. This study examined the constraints in adopting organic wheat and its impact on return on investment by employing farm level data of 300 wheat growers. We employ endogenous switching regression (ESR) approach that accounts for selection bias. The results show that organic wheat has significant and positive impact on the returns but adoption is slow due to number of limiting factors. Illiteracy, lack of information, liquidity constraint, complicated and costly certification process, absence of organic market and small land holdings are the major limiting factors for the adoption. Policy makers should focus to overcome the constraints of organic farming by providing easy, timely and adequate credit. Awareness and motivation of farmers should be done through education, training and extension services

Microfinanças e empoderamento de mulheres: uma análise de regressão de comutação endógena

Women in Pakistan are suffering from a great social and economic deprivation due to gender discrimination and inequitable distribution of resources. This paper examines the determinants and extent of women empowerment by their participation in microfinance programs. Data for this study were collected from different areas of Faisalabad, Pakistan, where most of the households were poor and had borrowed money from different microfinance institutes. Keeping in view the disguised endogeneity, Endogenous Switching Regression Model was employed which accounts for selection bias because of observable and unobservable factors. The analysis revealed that education level, household size, family system, educational expenditures, income level and the ownership of different assets like sewing machines have the statistically significant impact on the women decision to work and hence promote women empowerment. It is concluded that the government in developing countries should introduce income-generating activities, especially for women by providing them access to financial resources.Las mujeres en Pakistán están sufriendo una gran carencia social y económica debido a la discriminación de género y la distribución desigual de los recursos. Este documento examina los determinantes y el alcance del empoderamiento de las mujeres por su participación en los programas de microfinanzas. Los datos para este estudio fueron recolectados de diferentes áreas de Faisalabad, Pakistán, donde la mayoría de los hogares eran pobres y habían tomado dinero prestado de diferentes institutos de microfinanzas. Teniendo en cuenta la endogeneidad disfrazada, se empleó el Modelo de Regresión de Conmutación Endógena que explica el sesgo debido a factores observables y no observables. El análisis reveló que el nivel educativo, el tamaño del hogar, el sistema familiar, los gastos educativos, el nivel de ingresos y la propiedad de diferentes activos, como las máquinas de coser, tienen un impacto estadísticamente significativo en la decisión de las mujeres de trabajar y, por lo tanto, promover el empoderamiento de las mujeres. Se concluye que el gobierno de los países en desarrollo debe introducir actividades generadoras de ingresos, especialmente para las mujeres, proporcionándoles acceso a recursos financierosAs mulheres no Paquistão sofrem de uma grande privação social e econômica devido à discriminação de gênero e à distribuição desigual de recursos. Este artigo examina os determinantes e a extensão do empoderamento das mulheres pela sua participação em programas de microfinanças. Os dados para este estudo foram coletados em diferentes áreas de Faisalabad, Paquistão, onde a maioria dos domicílios era pobre e tinha tomado dinheiro emprestado de diferentes institutos de microfinanças. Tendo em vista a endogeneidade disfarçada, empregou-se o Modelo de Regressão por Comutação Endógena, que considera o viés de seleção por causa de fatores observáveis e inobserváveis. A análise revelou que o nível de escolaridade, tamanho da família, sistema familiar, gastos com educação, nível de renda e posse de diferentes ativos, como máquinas de costura, têm impacto estatisticamente significativo na decisão das mulheres de trabalhar e, portanto, promovem o empoderamento das mulheres. Conclui-se que o governo dos países em desenvolvimento deve introduzir atividades geradoras de renda, especialmente para as mulheres, proporcionando-lhes acesso a recursos financeiro

The Impact of Migration on Rural Poverty: The Case Study of District Faisalabad, Pakistan

Internal-migration is the process of displacement of people within a country, mostly for better employment. Pakistan is among those South-Asian countries who have high rate of internal-migration. Poverty is considered to be an important factor in this context. This study estimates the rural-household poverty in Pakistan's Faisalabad District and the impact of internal-migration on rural-household poverty. By using stratified random sampling technique, 180 respondents were selected and interviewed. Propensity Score Matching method was used to examine the causal effect of internal-migration on household-poverty level. Results reveal that the ATT estimates of 0.18 for poverty reduction which shows that the household participation in the internal-migration decreases the probability of poverty by 0.18 points, suggesting that internal-migration has a significant impact on poverty reduction among the rural-households. The study suggests the policy makers to focus on rural development and enhance labor productivity, so that internal-migration is discouraged, which will ultimately reduce poverty. Keywords: Internal-Migration, Rural-Poverty, Pakistan JEL Classifications: I320, J11, D310, D1

Impacts of rural non-farm employment on household welfare in Pakistan

This article examines the impact of non-farm work on household welfare, differentiated by female, for rural households in the Punjab province of Pakistan. We employ an endogenous switching regression approach that accounts for selection bias due to observable and unobservable factors to examine the factors that influence the household’s decision to participate in non-farm work and the impact of participation on household welfare. Given we find no substantial selection bias on unobservable factors; we also use PSM approach to check the robustness of our results from the ESR estimates. Separate estimates are also provided for male and female to address gender heterogeneity. The empirical results reveal that participation in non-farm work significantly increases per head expenditures and reduces household poverty level. This confirms the potential role of non-farm work in improving rural household welfare and poverty alleviation in rural areas of developing countries

Off-farm work, land tenancy contracts and investment in soil conservation measures in rural Pakistan

This study examines the impacts of participation in off-farm work and land tenancy contracts on the intensity of investment in soil-improving measures and farm productivity. A multivariate Tobit model that accounts for potential endogeneity between the intensity of investment and the off-farm work and tenancy contract variables is estimated for 341 rural households in Punjab province of Pakistan. An instrumental variable approach is also used to analyse the impact of tenancy contract and off-farm work on farm productivity. The empirical results show that participation in off-farm work and tenure security tends to increase the intensity of investment in long-term soil-improving measures. We also find that increases in off-farm work and tenure security exert significant and positive effects on farm productivity